Key Takeaways from 'The Win-Win Wealth Strategy': Creating Wealth by Understanding Government Incentives
I just finished reading "The Win-Win Wealth Strategy" by Tom Wheelwright and wanted to share my key takeaways about creating wealth by understanding the governments incentives.
Look at the government as a partner whether we like that or not.
The government has goals to keep the peace, protect the people, feed the people, shelter the people, and educate the people and will use tax incentives to accomplish those goals. Tax incentives are not loopholes for the rich that have created unintended consequences. The incentives are intentional and represent a genuine attempt to leverage private enterprise to accomplish its goals.
4 tests that must be met for a business expense to be deductible.
The IRS Code is 6,000 pages long and 1,000 pages apply specifically to businesses and business tax incentives.
4 Tests:
1. The expense must be made with the business in mind.
2. The expense must be typical in amount and frequency.
3. The expense must be important to the business for either growth, profitability, or market share.
4. It must be documented appropriately.
The government is your partner in businesses. It will invest in your business through tax incentives to achieve its goals. Take advantage of your partner's investment!
4 ways to qualify as a research expense.
The government, both state and federal, wants us to develop technology and execute research and development. The tax incentives show up in two ways: 1. Tax Credits and 2. Tax Deductions.
Credits are better because every dollar of tax credit offsets a dollar of tax liability. To qualify as a research expense, these conditions must be met:
1. The expense meets the four tests of a business deduction.
2. The research needs to be based in scientific, engineering, or computer science principles.
3. It must be a new process or product for the business itself.
4. The achievement of the desired result is uncertain.
4 basic segregated components of a property that are all depreciated at different rates.
Real estate gets a tax deduction that is solely for its industry = a depreciation deduction on an appreciating asset. The 4 components and rates are:
1. Land - No depreciation
2. Building - 27.5 yrs (Residential) - 39 yrs (Commercial)
3. Land Improvements - 15 yrs
4. Contents of the Building - 5-7 yrs
Be sure to maximize your wealth building through tax savings!
Renewable Energy - tax credits.
Energy production, especially renewable energy, is a huge goal for the government. There are tax credits for installing electric vehicle charging stations, purchasing electric vehicles, producing renewable energy, installing energy efficient windows and roofs, and building new energy efficient homes. I realize this photo doesn't provide all of the details, but it's really persuasive to add renewable energy upgrades to your home or office when you purchase it.
Take advantage of every opportunity when you are making your investments! Our YouTube Channel @money.mission goes over many creative ways to invest.
The government partners with farmers by providing many tax incentives.
The US Department of Agriculture lists food security as it's #1 priority. Local production of food is critical for defending an attack on our nation. If we are able to produce locally, then no enemy could cutoff food supply as a tactic to starve a city or our nation.
It has to be more than a hobby, but if it is take advantage!
The importance of a CPA and his insurance agent on your wealth building team.
The Tax Foundation estimates that health insurance premiums are the single biggest tax benefit provided by the government to US individuals. The tax benefit of deducting or not taxing health insurance premiums is larger than all corporate tax benefits combined.
The author says his two most important professionals on his team are his CPA and his insurance agent. There are a lot of tax savings opportunities in insurance. Make sure your two teammates understand your goals and are working together!
About 30 percent of investments in the US stock market are from qualified plan investors.
"Qualified Plans" are retirement plans where the government provides tax incentives in return for control. You have to determine whether you are going to pursue a Qualified vs Non-qualified approach. You can win with both plans, but be sure that you are an expert in the tax incentives provided for the one you choose.
"Where should I invest my money in order to produce the least amount of taxes?"
Asking yourself this question was the whole point of reading "The Win-Win Wealth Strategy." The government is more than willing to pay you to make the investments it wants. It wants to be your partner in growing your wealth because it achieves its goals along the way. The rich understand that if they invest their money in government-incentivized activities, they can get a lot richer and pay a lot less tax.
Make yourself smart on the government's goals and find yourself a great teammate in your tax advisor. Robert Kiyosaki says, "Investing is a team sport." Build your team and start growing!
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