Sweet Hop is an online marketplace curating the best in premium seating at stadiums, arenas, and amphitheaters nationwide. With Sweet Hop's 100% ticket guarantee, no hidden fees, and the personal high-level service you expect with a premium purchase, you can relax knowing you'll receive the luxury experience you deserve. Visit SweetHop.com today to book your premium tickets to your favorite teams, artists, and all the must-see live events to Sweet Hop around LA.

It's more than just a ticket. Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now while building a plan for financial freedom in 10 years or less. My name is Joshua Sheets.

I am your host. Today on the show, we're going to talk more about tax planning. This is, I guess, the third episode in the show. The first one I did was, "Should you cheat on your taxes to save money?" My answer to that was no. I tried to give two basic arguments for that.

Reason number one is when you evade your taxes, when you cheat on your taxes in order to save money, you run the risk of prison. If you care about personal freedom, then one of your primary goals is to not do things that could result in your being sentenced to prison.

But more importantly, number two, I made the argument that if you become a tax evader, you cheat on your taxes to save money, then you will always be looking over your shoulder and thus you will probably never reach your full potential. You might have the potential to be the kind of guy who could build a $100 million business.

But if you are just saying, "I'm not going to pay taxes," then you're going to be building some blue collar business where you can deal in cash instead of a white collar business where you can take digital payments, things like that. This is an important thing to consider. Then we talked about how you can make a lot of money and live in the United States tax-free.

In that show, I talked about the big concept, which is that you have capital gains assets that are growing and then you borrow against those assets, always remembering that debt is not income. When you borrow money, you have spendable cash, but it is not income. Forgive the thunder in the background if you're hearing that.

My mic does a pretty good job with noise canceling, but I'm recording in the midst of an extremely loud thunderstorm and the children are in bed. I'm a single father today. My wife is at an appointment. I'm a single father working from home while caring for her children recording in the middle of a thunderstorm.

That's where we're at today. I talked about how, yes, the basic concept of how you can live in the United States, make a lot of money, have capital gains assets, and then borrow money against them because debt is not income. Today I want to pivot and I want to talk about making less money.

I'm going to record a separate show where I talk about where tax savings should be on your list of priorities. Spoiler alert, it should not be your number one thing. There is no 100% tax bracket. Generally, it's always worth it to make a little bit more money, especially if you make that money in an easy way instead of a sweat of the brow type of way.

At the end of the day, taxes are only one factor, not the most important factor. I think you're better off to target your growth of your wealth and making a lot of money as long as you can do it in an efficient way rather than paying zero tax. It's useful to think about paying zero tax.

I'll also record a separate show where I talk about paying zero tax for moral reasons, tax resistance, because this is something I've been interested in for a long time and it's going to be something we talk about in today's show. The number one reason why you might want to say, "I'm determined to pay no tax," is because you have some kind of moral reason to pay no tax.

It's not a matter of the numbers, but you're saying, "I refuse to pay tax." A classic example of this is those who are war tax resistors in the United States. There can be many other good valid reasons for you to protest against taxes. Tax protests and tax strikes are a fundamental effective part of an activist's arsenal, of an activist's toolkit.

Way back in episode 17 of Radical Personal Finance, I interviewed a man named David Gross, who is an author of a book called 99 Tactics of Successful Tax Resistance Campaigns. We talked about whether you should stop paying taxes on moral grounds. David Gross has a good article that I'm going to be using as we introduce this show to explain how, if you want to pay zero taxes, you can accomplish that by lowering your income.

When we talk about this, it should be obvious to you. We all know that there are lots of people who live in the United States who pay no federal income taxes. Many estimates are that perhaps half of the population pays no federal income taxes. Now, in fairness, there's a lot of confusion about this, because while half of the population pays zero federal income taxes, that doesn't mean that half of the population pays no taxes.

When we talk about income taxes, we're always balancing these three different tax systems that are the most, that are the tax systems that grab most ordinary people. They are, number one, income taxes on the federal, state, and sometimes local level, but we just talk here at this show mainly about federal level taxes.

Number two, it is employment taxes, which are the taxes that you pay on your wages in order to support the Social Security and Medicare systems. Number three is capital gains taxes. All of these taxes work together. You pay all of them, depending on how your financial affairs are structured, but the tax planning that you do is different for each of them.

While it's true to say that half of the US population doesn't pay federal income taxes, it's not true that half the population doesn't pay taxes, because what that half of the population pays a lot of are employment taxes, because employment taxes wind up being what's called a regressive tax system, whereas federal income taxes are a progressive tax system.

A regressive tax system is a tax system that imposes a greater burden of taxation upon lower income people, whereas a progressive tax system is a tax system that imposes a greater burden upon higher income people. You have the employment tax system, which is functionally basically a regressive tax system because of the Social Security wage base.

On Social Security taxes as part of the employment tax system, it's a regressive tax system. Remember that as of 2021, the Social Security wage base is $142,800. If you are an employee, you pay 6.2% of your wages up to the first $142,800 of income. You pay 6.2% on Social Security, and then your boss pays another 6.2% for you.

If you're self-employed, you pay 12.4% of your first $142,800 of self-employment income. That's a maximum tax of $17,707. If you're self-employed, $8,853 if you are an employee, but that's the maximum for Social Security. Now Medicare, it's a bit more complicated because Medicare has two numbers. If you're an employee, you pay 1.45% of your wages up to the first $200,000 of wages.

Then above $200,000, you pay 2.35% of your wages in Medicare taxes. Of course, if you're self-employed, then you pay the 2.9% on the first $200,000, and you pay 3.8% on everything above $200,000. With your Social Security taxes, you have a regressive tax system. For lower wage earners, that's going to be a big number.

If you're making a million dollars and you pay the max total as an employee of $8,853, it's not that big of a deal in terms of your overall taxation. For Medicare, you have something of a flat tax system where it's just as flat 1.45% up to $200,000, then it's 2.35%.

For income taxes, you have a highly progressive system where lower wage earners pay a low rate, high wage earners pay as high as 37% under the current tax law, possibly increasing. Then for capital gains taxes, you have something more of a flat system. You have a 0% capital gains tax bracket, a 15% capital gains tax bracket, and a 20% capital gains tax bracket, but a little bit flatter than some of these other brackets.

You're always managing these three tax systems simultaneously, and it's important that you specify which particular tax system are we talking about. Each of them has their own issues. Let's talk today about federal income taxes. How can you live in the United States and reduce your federal income taxes to zero?

Well, the answer is don't make very much and then use all of the applicable credits and deductions to lower your overall taxable burden. I'm going to begin by reading some portions of David Gross's article on this subject. Remember, David Gross is a war tax resister, and so his article is called "How to Resist the Federal Income Tax by Getting Under the Tax Line." Introduction.

This guide shows you how to stop paying federal income tax in the United States legally and by the book, by keeping your taxable income low and by qualifying for certain credits. I call this the D.O.N. method, short for don't owe nothing. This guide is for people who are considering tax resistance but aren't sure how to go about it.

It may be useful to people who simply want to pay less federal income tax, whatever their motives. Why I wrote this. Here's a brief history of how I got interested in this subject and why I thought it was important to create this guide. In March of 2003, I decided to stop paying federal income tax because I did not want to fund the government's activities.

I decided to do this by lowering my taxable income and by taking credits that reduced my income tax burden to zero, what I'm calling the D.O.N., don't owe nothing method. I was surprised to learn that I could earn quite a bit of income and live very comfortably without paying federal income tax and without having to battle the IRS.

I could play by their rules and still pay nothing. And then he goes on and talks about some frequently asked questions that would be of interest to people who are interested in tax resistance. I'll link to the article in the show notes, but let's talk about the practical of it.

How the D.O.N. method works. The D.O.N. method takes two paths. The federal income tax doesn't tax all of your income, just your taxable income. Path number one is to remove as much of your income as possible from the taxable income category. Once you've done that, you'll have some taxable income and some amount of tax owed on it, but you can offset this tax or even reverse it into a refund by using various credits.

Path number two is to qualify for these credits. You use those paths to figure out how much money you can earn and spend without owing income tax. Then you look at your lifestyle and your goals and adjust them if necessary so that you can live within your means at that income level.

The remainder of this guide covers this in greater detail by reading this guide. You will be able to investigate for yourself if the D.O.N. method will work for you. Path one, get your income out of the taxable income category. When you fill out a 1040 form, your income cascades through several levels, changing a little each time from income to total income, then to adjusted gross income, and finally to taxable income.

Each stage gives you the opportunity to prevent some of your income from being taxed. From income to total income. Income is just whatever money you brought in during the year, but income according to the IRS is not so simple. Some income is invisible to the tax collector. For example, if you had money deducted from your paycheck to go into a 401k retirement account or a health savings account, the IRS doesn't include that money in your income.

There are other ways to shield your money from taxes. For example, at my last job, I had money withheld from my paycheck to buy my transit passes, and that money also did not register as part of my total income. Keep your eye out for opportunities like this. Ask your employer what pre-tax contributions you could make.

Consider switching to a variety of health insurance that qualifies for health savings accounts, and then shelter some of your income by saving it to pay health costs. Your total income also includes any capital gains you made during the year. For instance, if you sold stock or property at a profit, you can also subtract some capital losses when you calculate your total income.

If you run your own small business or do gig economy work, this profit or loss is also part of your total income. Some tax resistors find that having such a business helps them to regulate income, and years when income gets too high, they invest more money in their business and take a business loss or reduce their business profit.

You can't run your business at a loss every year though, or the IRS will decide that what you've got isn't a business as much as a hobby and your deduction may go away retroactively. Among the other things that are part of your total income are interest, dividends, and unemployment compensation.

This is just a brief introduction to some of the ways your total income is calculated. I haven't gone into it in much detail because I'm not really qualified to go into specifics about things like business expenses and such a discussion would be too long for this guide. From total income to adjusted gross income.

Adjusted means lowered because all of the adjustments are deductions, so use as many as you can. Do use your "adjusted gross income" to calculate some of the credits that I cover in Path 2 below. And in general, the lower your adjusted gross income is, the better. One of the best of these deductions is for a tax-deferred individual retirement account (IRA).

Not only because you can deduct the money you put in, typically up to $6,000 from your total income, but because when you put money into a retirement account you can qualify for a generous credit, which I'll cover in the Path 2 section below. Be aware though that there are forms of IRA, such as the Roth IRA, that aren't tax-deferred and that won't lower your adjusted gross income.

Ask about the tax ramifications before you invest. If you run your own business or are otherwise self-employed, you may be able to take deductions here on things like your health insurance costs. Depending on the state of the tax law, you may be able to take this as a simple business expense or as a separate tax line item, and part of the cost of your payroll taxes.

Other deductions are available for interest paid on student loans and for educational supplies bought by teachers. These aren't the only deductions, and I haven't covered them in much depth or detail. Just an overview. From Adjusted Gross Income to Taxable Income There is one remaining deduction, either the itemized deduction or the standard deduction.

Once you subtract this, you are left with your taxable income. By itemizing, you can take deductions for things like charitable donations, medical expenses, state taxes, and such. But for most people, the standard deduction is higher than their itemized deductions would be, so they're better off taking the standard deduction instead.

Once you've made this deduction, you have your taxable income, and you can look in the tax table to find out how much you're supposed to pay. But don't get out the checkbook yet, because you're only half done. Now let's talk about Path 2, Use Credits to Eliminate Your Tax Liability Many tax credits exist.

Credits are not deductions that you subtract from your income. Instead, you subtract them directly from the tax you would otherwise owe. For example, if the tax table says you owe $750, but you qualify for a $500 credit, you subtract that credit directly from the tax. $750 minus $500 equals $250.

One credit is for your education expenses. Another is for any income tax you've paid to a foreign government. Another is for your child care or dependent care expenses. You also get a per-child child tax credit, and can also take a credit for any adult dependents you have. My favorite credit is the Retirement Savings Contribution credit.

Remember how, when you put money into a tax-deferred retirement account, you were able to deduct it from your income before you calculated your tax? Now it gets better. You can take a percentage of the amount you put into retirement accounts as a credit as well. If your adjusted gross income is low enough, that percentage is 50%, and your credit is as high as $1,000, which cuts your income tax to zero.

The Earned Income Tax Credit is a special creature. Most credits allow you, at best, to lower your tax to zero. The Earned Income Tax Credit allows you to lower your tax below zero, so that the government actually owes you money. This sort of credit is called a refundable credit.

In order to qualify for the Earned Income Tax Credit, your adjusted gross income must be very low, but you must have earned some income during the year. It's easier to qualify if you have at least one dependent child. Millions of people qualify for the EITC, but it does typically require having a very low income, lower than is strictly necessary for the DON method.

Now he goes on and gives some additional benefits that listeners of this show will be aware of. But let's use his example, and then I'll give you some ways to turbocharge these results. So here's his example. Remember, the goal here is to pay zero taxes while living zero - excuse me - the goal here is to pay zero federal income taxes while living in the United States.

Example. By September, Joe "Tax Me Not" had earned $39,000 at his job. $6,000 in 401(k) contributions were deducted from his wages, along with $3,500 for his health savings account, $400 for pre-tax commuter checks, $3,060 for FICA tax, and $2,000 for federal income tax. Then he decided he didn't want to pay federal income tax anymore, and he began to try to get that $2,000 back by using the DON method.

He quit his job and started a business doing freelance manuscript editing. He went through the paperwork and fees involved to get a business license, and he put some advertisements in magazines catering to authors and scriptwriters. By the time he finished with this, he'd spent $2,750 on his new business, but it started to pay off.

He got his first of several freelance jobs in November, and his first check from a happy client - $1,800 - arrived just before the end of the year. He also sold some stock he'd bought. This brought in $1,250 in income, but he'd bought the stock for $5,000, so he really got hosed - $3,750 in losses.

He can take $3,000 of those losses as a deduction this year, and save the leftover $750 for next year. Income - $39,000. Less 401(k) deduction of $6,000. Less commuter checks of $400. Less business expense of $2,750. Plus business income - $1,800. Less capital loss - $3,000. Equals $28,650 of total income.

Joe's been lowering his expenses because he knew he might quit his job, but he's still kind of strapped for cash. He needs to put $6,000 into an IRA to make the DON method work for him. He does some research and discovers that the IRS will let him take credit for putting money into an IRA before he actually makes the contribution.

As long as he puts the money in before the tax filing deadline next year. So he declares the $6,000 contribution on his tax return in February, but waits until he gets his refund check from the IRS before he actually makes the contribution. Total income - $28,650. Less health savings account contribution - $3,500.

Less IRA - $6,000. Equals $19,150 of adjusted gross income. Joe takes an ordinary standard deduction because when he calculated his itemized deductions, they didn't amount to much. Adjusted gross income - $19,150. Minus standard deduction - $12,200. Equals $6,950 of taxable income. Joe looks in the tax table for the tax on $6,950.

It's $695. He then fills out the retirement savings contributions credit form. Because his adjustable gross income is $19,250 or below, he can take 50% of the first $2,000 that he put into retirement accounts, like his 401k and IRA, as a tax credit. This is a $1,000 credit. Alas, the IRS won't let you take more of this credit than you owe in taxes, so it only eliminates the tax rather than converting it into a refund.

However, Joe is satisfied and claims victory. Tax on $6,950 is $695. Less a retirement savings contribution credit of $695. Equals $0 of tax owed. Joe files his return and soon gets a check for $2,000 from the federal government. The $2,000 that had been withheld from his wages for income tax.

He remembers to put that check into his IRA as part of his $6,000 contribution. Over the course of the year, he put $12,000 away for retirement, put $3,500 away to pay his medical bills (or for retirement if he stays healthy), and spent $2,750 to get his business off the ground.

Subtracting the FICA that was taken from his paycheck, that's left him with $21,490 to spend however he wants, plus a business, plus $12,000 invested to spend in his old age, and $3,500 to cover his health insurance deductible if need be. Not too shabby. Wages $39,000, plus stocks sold $1,250, plus business earnings $1,800, less retirement savings $12,000, less health savings $3,500, less business expenses $2,750, less FICA $3,060, equals $20,740 free and clear.

Joe figures he can live on $20,740 pretty easily, and can even save up a little bit for when he runs out of that rotten bubble stock and he has to squeeze things a little tighter. He figures he'll probably be pretty good at living on the cheap by then though.

Joe's cousin, Jane, earns only $23,000 a year. By the time her taxes have been withheld from her wages, including about $1,200 in federal income tax, she has less free and clear take home income than Joe does. She can't believe that Joe, who brought in much more money than she did last year, and has all that savings to show for it, doesn't have to pay any federal income tax at all.

She's going to go through the numbers herself and see if maybe she could try the D.O.N. method too. So there's the example from David Gross's article on how to resist federal income taxes by getting under the tax line. I think it's a good place to start because it demonstrates some of the principles involved.

Again, separately I'll talk about how much should you prioritize this. Someone who's not trying to resist federal income taxes, by the way, in the way that David Gross is, would clearly say, "Well, wouldn't it be better to go make $100,000?" Well, perhaps. But by understanding this, you can understand how to adjust it.

Now let's use some other examples because depending on your personal situation, these numbers may be quite modest or they might be much larger. If I were a single man like I believe David Gross is, he's never commented about being married or having children. If I were a single man, I think I could live very comfortably on that amount of money.

I wouldn't live in a house. I would probably live in an RV. I'd live kind of a nomad lifestyle living modestly. But there are lots of people living very comfortably on $1,500, $2,000 a month, seeing the world, et cetera, traveling all around. And that's the kind of thing that I would probably do if I were in his situation.

However, I'm not. But because I'm not, I have a different set of numbers. So let's pretend that I wanted to live in the United States, but I was very concerned for moral reasons about paying $0 of tax. I would say, "Listen, I'm not going to earn a million dollars.

I'm not going to go black market. I'm not going to not pay tax. But I want to live in the United States and I want to, for moral reasons, pay $0 of tax. What could I do?" Well, remember, the big difference between David and me is I have four children.

And so with a $2,000 child tax credit, all of a sudden now my children can help me to reduce my taxable burden significantly. So the numbers would change significantly. So let's play a little game here. Let's begin with this. Let's say that I have a business or a series of businesses that generate for me a total of $150,000 of gross profit from...

Excuse me. Let me rephrase that. Let's assume that I have a couple of businesses that generate for me $150,000 of gross revenue into the business, gross revenue. And let's assume that I've been thoughtful about the kinds of businesses that I engaged in. And I chose the kinds of businesses that allow me to generate my income in a very pleasing way and that allow me to shelter the kinds of expenses that are important to me to shelter.

Let's say, for example, that my wife and I, we have a real estate agency. And she has a real estate license and I have a real estate license. And we're real estate investors. And so now, because we spend quite a lot of time driving around to show property to clients, we wind up doing a decent amount of entertaining.

We can use our meals and entertainment expenses with our clients to generate more business. We can do all kinds of interesting things. We could use our home once a year for a big business party and deduct those expenses. Our cell phones and our computers and a major portion of our mileage is now deductible.

And we've created something that allows both of us to work in the business. And so now, if we go to a real estate agent seminar in Orlando, we can go to a seminar on Thursday and Friday. We can stay over the weekend and go take our children to Disney World, make sure we have meetings scheduled on Monday morning.

We could fly home on Tuesday or drive there with take our children. Now we have ample business deductions. All the kinds of things that we've talked plenty about here on Radical Personal Finance. So let's assume that I have $150,000 of gross revenue, but that I have $30,000 of business deductions, business expenses that are associated with generating that revenue, ordinary necessary expenses, what the IRS would call them.

So that drops my net profit from my business from $150,000 to $120,000. Let's assume now that my wife and I put into, let's say we set up a solo 401k and she makes contributions to that and I make contributions and we contributed a total of $25,000 to our 401k for our real estate business that we run together.

And so now we've taken our $120,000 of net profit and I've lowered that with my personal income from $120,000 to $95,000. So we have now $95,000 of wages coming into our household. So the first thing to keep things very simple that we do is let's assume no other deductions at the moment, right?

We could do a health reimbursement arrangement program. We could set that up in our business that would allow us to deduct all of our kids' medical expenses, their orthodontia bills and all kinds of stuff with a health reimbursement arrangement program. We could participate in a health savings account. We could do a couple other things.

But let's skip most of that. We have $95,000 of wages and we just simply have a straight $95,000 of adjusted gross income. Well, then we take from that the standard deduction for a married couple filing jointly, which is $24,800. And you subtract $95,000, you subtract out $24,800, which leads us with a household taxable income of $70,200.

That's our household taxable income. We now take that taxable income over to the tax chart and we wind up with $8,032 of tax owed. So the tax chart says that if you have a taxable income for a married couple filing jointly of $70,200, you owe $8,032 of tax. Now in this example, with this high of an income, some of the other things like the earned income tax credit and other things won't be so significant.

But remember, I've got four children, so I can take a child tax credit of $2,000 per child. That's a total of $8,000. And now I subtract $8,000 from my total taxable income, sorry, from my total tax of $8,032, which leaves me with a total tax due of $32. So that's pretty close to zero.

If I scratched around and dropped my income from $95,000 to $94,000, then I could probably do a little bit better. Just was looking for a simple math. And so this can show that I can actually live in the United States and if I'm thoughtful about how I put all these things together, notice I emphasized having a kind of business that allows me to shelter business deductions that are the kinds of things that I would need to, that would make for a pleasing lifestyle.

I can, and then I use retirement accounts to put money into a retirement account, which I could put more than $25,000 if I structure things properly. I can shelter a significant amount of money from tax and wind up paying no federal income taxes. So this is a powerful thing.

The business is not required, right? If I just had $95,000 of wages working for someone, maybe I have a, maybe I'm an accountant, right? And I work and my wages are $95,000. Well, in my situation, I would wind up owing $0 of federal income tax. And so this is how you do it.

And so if you're interested in paying $0 of federal income tax, perhaps you have on moral grounds, something like, like David does to be a war tax resistor. This is how you live in the United States and pay $0 of federal income tax. Now, how do you turbocharge this?

Well, I've already mentioned businesses. The way that you turbocharge this is instead of working at a job that you don't like, that doesn't give you the opportunity to have many business expense, you start your own business. You start a family business. Maybe you're working at a salary. Your wife runs an at-home business.

You start something that incorporates the two of you. You start the kinds of businesses that provide you with the kind of lifestyle that you want to live. When I think about it with my personal values, I think about, all right, I'm going to start a real estate business where we have a small real estate agency, where we sell real estate.

We're also going to have a rehab business because now that allows my wife and me, we both have business miles. We both have business lunches. We both have cell phones. We both have computers. So this covers a lot of our basic needs there. That allows us because we both work for the same business, we can travel together.

We can go to seminars. We can go to educational events. We can go to promote our services. We would start a number of different things that provided us with the lifestyle that we needed while also still being significantly profitable. If you're thoughtful about the kind of business that you start, then you can use it and have quite a lot of completely legitimate business deductions for your household.

The second way that you turbocharge this is by maximizing your retirement contributions. Again, back to your own business. Your own business run properly with a properly structured solo 401k, which can be a husband and wife solo 401k as well, can allow you to exempt up to basically $50,000 a year, a little over $50,000 a year from your wages.

So you can put a lot of money into retirement accounts to gain the tax deferral. So that's also a really useful thing to keep in mind. And then you optimize this on the expense side by saying, "How can we live really well on less money?" Now, a lot of people wouldn't consider $95,000 of wages a little bit of money, but still, it's probably less than your capacity.

So if you're focused on paying a low income, sorry, a low amount of tax, you will want to get good at other things. If you were David Gross and you were living low, you would want to figure out a lifestyle that allowed you to generate the things that you need at a relatively low cost.

How can you do that? Well, you can choose some kind of unusual lifestyle. You can choose to lower your housing expenses by living in some kind of shared housing. Maybe you work for a farmer and the farmer says you can have the little apartments out on the backside of the barn and that gives you a comfortable little apartment and that's part of your overall wages.

And because you're living there for the convenience of the employer to care for the farm when the farmer is not there, you don't have to pay tax on the value of that housing receipt. That would be an example. Perhaps you choose a non-traditional living situation. You live in an RV, right?

You're a van dweller. You live in an RV. You travel around and this just lowers your overall costs significantly. Perhaps you live in a paid-off house where maybe your dad died and left you a house that you live in and it's totally paid off and so your living costs are quite low because of that.

Maybe you live in a sailboat and so you don't have many costs there and then you figure out how to keep your overall sailing expenses fairly low. I mean there's so many things that you can do. You live in a tent in the woods for crying out loud. There's so many things that you can do to keep your expenses low on housing.

Then you look at your other expense categories. You minimize utility costs through energy efficiency. You minimize your phone costs or your internet costs by going to the library. A guy like David Gross, single guy, he could live in a modest apartment. He could work from the apartment, work from a coffee shop, work from a library and have relatively low communications expenses while still building his business.

Perhaps you grow a big garden. Maybe you live on a farm and you grow a big garden that provides your family with a lot of food and you raise animals and you butcher your own animals. Now instead of to provide for your four children, instead of needing to spend $1,500 a month, maybe you spend $250 a month but the rest of your labor is just simply non-taxable labor for your own personal household.

You're cutting wood to heat your house with. You are raising your own food, etc. So you can keep your expenses low. So this is a really good solution as well. So this is how you turbocharge it if you're committed to living in the United States and paying no tax, this is a way that you do it.

Now there are other things that you can do as well. We've talked about finding income that just simply doesn't exist for tax purposes such as income from the sale of a personal residence. If you were wealthy, municipal bond income. There are always a few different kinds of income that you can do if you're committed to paying no tax.

And that's where I want to leave things for now. Now should you do this? It depends on your motivation. We'll talk about the philosophy in a separate show. But you should know that this is available to you. What is your big problem in all of this? Your big problem is that here we've really only dealt with your federal income tax.

We haven't dealt with that big bite of employment taxes. That would be your big cost. Because on that same $95,000 of wages that I used the example, that $95,000 of wages, if I generated $95,000 of wage, I would have a $32 tax bill, $32 of taxes owed. However, if I was an employee generating that, I would wind up with a total tax bill of $7,267 by generating that $95,000 for employment taxes, paying for Medicare and Social Security.

If I were self-employed on that same $95,000, I would wind up with a $14,000, oops, excuse me, did the math wrong, 15.3%. I would wind up, yeah, $14,535. So that would be my biggest tax bill. How do you avoid employment taxes? Well, you either have to not create wages of any kind.

So how do you do that? Well, you have a business that doesn't generate wages. People will minimize their wages with an S-corporation, where you pay out a combination of wages and dividends. So you could lower that with an S-corporation, but you can't eliminate it. That's not going to work.

Or you can generate income that's not wage income, trading, capital gains, profits, or you can leave the country. Or you can work for an offshore corporation when you've left the country. Then you can eliminate your employment taxes. Just always keep in the back of your mind, you've got these three different tax systems that you're dealing with, where you're kind of fighting among the three of them.

But that's how you live in the United States and earning a varying amount of income, pay no taxes. Thanks for listening. As I go today, let me remind you that I am setting up a new text messaging system. If you'd like to text me, by the way, you're welcome to ask me any question.

So far, I've responded to 100% of listeners who've sent me a question. So if you'd like to text me your question or comment about the show, send me a text message at 561-468-3158. I'm also going to be using the text message system to notify you about my travels, notify you of forthcoming meetups, things that I'm doing, and just to chat with you and hang out with you.

So if you'd like to do that, go and send me a text message now at 561-468-3158. Again, text me 561-468-3158. Thank you to those of you who've been leaving reviews for Radical Personal Finance on the various podcast platforms. So good to see those reviews coming in. If you could do me a favor, take a quick moment, it would really help the show grow.

If you just take about 30 seconds, grab whatever platform you're listening on, find where the show is listed in the directory, click rate and review, leave me five stars, four stars, two stars, one star, don't care, whatever you want, and a quick one or two sentence comment about what you like about the show, and I would be so grateful.

Be back with you soon.