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How to Earn $100,000/year Tax-Free Investments in 2023 | Early Retirement Guide


did you know that you can actually pay zero percent in capital gains taxes while making a six-figure income I'm gonna give you two parts to this video the first part is how to pay zero percent in capital gains taxes when you're still actively employed making six figures of income and the second part is how to pay almost nothing in taxes while you're in early retirement if you're brand new to my channel my name is Sai and welcome my channel is all about how to achieve Financial Independence and retire early I'm 36 years old and I've been on my fat fire Journey for the last six years and I went from one hundred and ten thousand dollars in Consumer Debt to managing over seven figures in total assets and ever since I paid off my stupid debt in 2016 I have been consistently saving over 65 percent of my gross income and time is an Investor's greatest asset while your knowledge is the Ultimate Weapon to drive your success so the first thing you need to know is how the 2023 capital gains tax rates are struck structured almost every person I met in the fire Community understands how they're going to be taxed during their early retirement so having an effective withdrawal strategy could save you a lot of money in taxes now I want you to keep in mind that this is not any form of financial or tax advice and I don't know your financial situation so this video is just to give you general information and how I'm going to save taxes during my early retirement in 2023 the zero percent capital gains tax rate is from zero dollars to eighty nine thousand two hundred and fifty dollars if you're filing your taxes jointly and the 15 capital gains tax rate is from 89 251 dollars to 553 850 keep in mind that this is taxed on the profit you made from an asset that you held for at least a year let me give you an example if you bought a stock in 2022 for fifty thousand dollars and then you sell your stock a year later in 2023 for let's say a hundred thousand dollars then the fifty thousand dollar profit you made will be taxed in the zero percent tax rate because it's between zero and eighty nine thousand two hundred and fifty dollars right but this is also assuming that you don't have any other income I'll give you some examples with other incomes so stay tuned for that but I want to make sure you'll understand how the IRS taxes you and your long-term capital gains they only tax your profit not your principal and you also have to hold an asset for at least one year to be qualified for the zero percent capital gains tax rate easy peasy right it's not just stocks that you can be taxed in the capital gains uh gains rate your qualified dividends can also be taxed as long-term capital gains you can check out this video about the dividend investing strategy Linked In the description below but just to give you a quick example let's say you have fifty thousand dollars invested in a dividend stock that pays a uh four percent annual dividend yield the two thousand dollars you receive in dividends will be taxed at zero percent as long as it's a qualified dividend the same capital gains tax rates apply to assets like cryptocurrencies nfts jewelry coin collections and real estate as long as you hold it for more than a year however the exception is if you sell your owner occupy real estate and if you bought a home for two hundred thousand dollars uh and sold it for five hundred thousand dollars after living in it for more than two years of the five past years then you get to keep the two hundred and fifty thousand dollars in profit and pay fifty thousand dollars in capital gains tax if you're single if you're married and filing your taxes jointly then your real estate exemption is up to five hundred thousand dollars then you get to keep the three hundred thousand dollar profit tax-free and if you need help with your personal finances like budget saving and Investments to achieve your financial Independence you can schedule a free one 120 minute Financial coaching session by visiting fivestarch.com coaching now let's talk about how I pay my capital gains taxes before I reach my early retirement due to the amount of my active income I actually do pay 15 in capital gains taxes whenever I gain profit from a sale of my assets like stocks I rarely sell my investments unless I have fundamentals changes in an individual stock that leads to my decision to liquidate it what I really like is that the IRS allows me to do what's called tax loss harvesting which I'll make another video about it in the future and tax loss harvesting is a strategy U.S investors use by selling an investment at a loss or taking a capital loss and offset taxes owed on an investment sold at a profit or a capital gain so let's say I bought one stock over a year ago for ten thousand dollars and I sold it for seven thousand dollars and that's a three thousand dollar Capital loss right if I sold another stock I bought for five thousand dollars and made one thousand dollars in capital gain then I can offset capital gains with excessive uh losses the remaining two thousand dollars in losses can be used to offset my personal income for that year or carry the loss over to offset gains in future years since December 31st is the last day I can harvest my losses for that tax year I usually wait until the end of the year to carefully strategize tax loss harvesting I also need to be mindful of the wash sale rule which means that I need to wait 30 days before or after the transaction of a capital loss to buy the same or similar stocks I sold at a loss to keep the capital loss deduction and here's a realistic scenario I'm going to show you when I could pay virtually zero dollars in taxes and let's say my wife and I make fifty thousand dollars in active income and fifty thousand dollars in dividend income with 27 700 in the standard deduction question for a married couple in 2023 our taxable income would be reduced to seventy two thousand three hundred dollars and that puts us under the zero percent capital gains tax rate under 89 89 250 a lot of people forget about the standard deduction and how it works to their advantage ever since president Trump signed the uh the tax cuts and jobs act in 2017.


Now even if your income is high uh or too high to make the threshold you still only pay 15 in capital gains uh capital gains tax when you sell your assets with realized gains the key here is to hold your assets for at least a year or more and if you make a hundred thousand dollars a year as a single person and you sell an asset that your health for less than a year then the short-term capital gains tax rate could be as high as 22 percent and it's important to calculate your Investments and how much you're looking to have over the years and this is why I want you to get my financial Independence resources is for free by visiting fireside.com contact and here's how I plan to pay almost nothing in taxes when I retire early my early retirement is between the ages of 45 and 60.


During that time I'm not going to have any W-2 income because I'll be retired right the only active income I'll have is my business and real estate I'm gonna have at least a million dollars in my dividend stock portfolio that pays about forty thousand dollars a year in dividend income I'm gonna have at least another million or two or two million in my growth stock portfolio that pays another sixty thousand dollars a year without my business or real estate income that's zero percent in capital gains taxes with a standard deduction so that I would pay virtually zero dollars in taxes and during my early retirement I'm gonna convert between forty thousand and fifty thousand dollars from traditional IRA to Roth IRA because my taxes are already low with unemployment with a five year rule I'm gonna be eligible to draw forty to fifty thousand dollars a year tax free and penalty free between ages 50 and 65 and I have a video about my Roth IRA conversion strategy Linked In the description below so between ages 45 and 50.


I should have one hundred thousand dollars a year just in dividend income and other capital gains anything more than that is extra and at age 50 I should have one hundred and fifty thousand dollars a year in tax-free income with the Roth IRA conversions and if I have my business and Rental income making one hundred thousand dollars a year that's 200 or 250 000 a year in income and only pay taxes on the business and real estate and what's really nice about owning a business and real estate properties is that I get to write off my expenses which lowers my taxable income even further now look at what happens after I turn 60 and I get to withdraw from my tsp 401K earnings in my Roth IRA and collect my military pension and federal employee pension the projection I'm running right now is three hundred thousand dollars or more in retirement income every year my dream is living several countries throughout the year based on the weather season and I want to live in countries like Croatia Switzerland Norway Portugal Japan and Finland because life is way too short for me to just retire in one place so while I'm still young in my 30s I'm going to save and invest as much as I can but at the same time I'm gonna have some fun by traveling around the world so when I retire early I'm gonna have endless fun to enjoy the time I have left in this universe so let me ask you this would you sacrifice six months one year or two years of your life to get your finances in order like paying off your debt so you can enjoy the rest of your life without ever worrying about losing a nine-to-five job and if you want to know more about how to start investing in your financial Independence be sure to check out these two videos so with that said I appreciate you watch my video don't forget to subscribe and I hope to see you in the next video have a good one [Music] thank you



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