The IRS Will Literally PAY YOU to Make These Investments

Did you know there are investments where the IRS will literally help you make money? And most people have no idea they exist. Not metaphorically, not indirectly. I mean, they will literally subsidize what you invest in if you know where to look. Now, why do they do this? It's because the government wants to incentivize Americans to do things they're bad at or unable to do. So learning to read the tax code like an instruction manual is perhaps the most powerful way to unlock your wealth-building journey. However, most people do not want to read the tax code, so I'm here to help explain what you you can do and make it simple so that you know what you can invest in to literally make money or build wealth faster. So I'm going to show you how this exactly works and why the same tax code that takes money from most people is quietly helping others build serious wealth, but not in a sinister way or some evil manner. It truly is there to help America become stronger and more Americans build wealth. You just got to know where to look. And after 25 years as a CPA and tax attorney, I can tell you this, the wealthy understand better than anyone that the tax code isn't really about taxes, it's about incentives. My name is Mark J. Kohler, and I'm going to help you to start thinking like someone who uses the system instead of fighting against it. And stick with me because at the end I'll show you how all these investments can come together into a real actionable strategy. Now, before we can get into the first investment or asset class, however you want to call it, let's talk about the big idea most people miss. And here's the mindset shift that changes everything. The tax code is not about being fair. It's about influencing behavior. Congress is trying to get things done, build housing, create jobs, produce energy, grow the economy. When we elect our government officials, senators and representatives at the state or federal level, they're going to try and create laws or tax incentives as one example to get people to do things. How can they help people in their area, their constituency, make more money and build wealth? And here's the part most people I think realize, the government's not good at doing all of these things in the economy themselves. So instead, What they did, they turned to you, to us as Americans, and they say, hey, if you'll go do this, we'll give you a tax break. And when you do this, you can actually make more money because you're investing in what we as a society have said will reward you to do. So let's start with number 1, which probably won't come as a big surprise, and that's real estate. And this is where the wealthy quietly build serious wealth. And let's start with an example that will make complete sense here. Some of you might remember the terrible hurricane in the South, Katrina. Almost 20 years ago, this hurricane came through and decimated a lot of Louisiana, Texas, and a number of states. The government, if you remember, couldn't even get water down to the Astrodome for a week to help people. It was a disaster, literally. So in the weeks and months to follow, the government said, how can we help rebuild this area? We need homes, infrastructure, everything. They had to start all over in some communities from scratch. So they said, you know what, let's create a depreciation incentive. We'll call it a GO Zone. And that's literally what the legislation was called, the GO Zone. They said to investors around the country, if you'll go down to this zone, any area affected by Katrina, and build homes and invest in real estate, we'll give you 100% deduction of the cost of the buildings in the year you complete it. This will be a huge write-off for you to get some massive depreciation. 'Cause you're going to put money down, use leverage. So you may only put down $100,000, but get a mortgage of $300,000 to build a new home for someone. And you get to write off maybe $300,000 to $400,000 after subtracting land from the equation. But you only invested $100,000 as the down payment to build this home, but got 3 times that in a tax write-off. Plus you're going to get the cash flow from renting it, then ultimately selling it, it goes up in value. Well, investors from around the country ran down there and started rebuilding the areas affected by Katrina. It was phenomenal. Investors won. People got homes much faster. The government finally got something done by using the investors to do it. And it was all done through tax legislation. I was a tax lawyer at that time, helping hundreds of investors take advantage of that very go zone. And I saw a lot of people get really rich. So some of you may ask, why is that allowed in the tax code? It was because it was meant to be. The government planned for that through the strategy of depreciation. So they were able to write off the value of the property, not the land, and as it went up in value, they even got some capital gain incentives as well. So think about that. You're collecting rent, building equity, watching that appreciation, and you get to show a loss on paper greater than you invested because you're using leverage. Now that's powerful. Now, even today, in today's market, we still have some incredible strategies that work just like that. Cost segregation, bonus depreciation, and it allows you to front load massive deductions often in the first year of ownership when you buy rental property or investment property. And I've been seeing investors buy property and generate six figures in deductions in just one year. Now remember, that doesn't just apply to a disaster area. It could be short-term rentals like Airbnbs and VRBOs, long-term rentals, college housing, multi-units, commercial buildings. Any type of depreciable real estate can take advantage of these strategies. But there's more. In the realm of real estate, we have the new Opportunity Zone tax incentives that come out starting January 1st, 2027. Be on the lookout for those. We also have low-income housing. If you're going to build in a low-income housing area, those tax incentives can be incredible. And even a project that I have right now uses Section 8 guaranteed federal rent to subsidize people investing in low-income housing areas. And frankly, the list goes on and on. So strategy number 1 is investing in real estate in a variety of ways and exponentially building your wealth because you're using tax strategies to combine it with the real estate investment itself. Number 2, oil and gas. As you've seen in the news, oil and gas, the cost of gas, drilling in the United States. It is a big topic and it's extremely important that we as a government and as American people try to drill and get all the natural resources we can out of our country before we go and get dependent on other countries around the world, including, of course, the Middle East. So there are government incentives for people that will invest in projects for drilling in the United States. Now, these can be very advanced, so I will hit the highlights. The first one is just investing in a drilling project. It's known as an intangible drilling cost strategy. And under an IDC, it allows investors to sometimes take as high as 80% of their first year's investment as a tax write-off for the depreciation of the equipment doing the oil and gas project. Then we also have the depletion allowance, that once you start getting royalties, whether you invest in the initial drilling or come in afterwards and buy a royalty, you can exempt the first 15% of your income from being taxed at all with this depletion allowance. So the point is, when you invest in oil and gas, you can actually get write-offs upfront, which we love, not pay tax on the entire cash flow, only on 85% of it, and then have the benefits of future cash flow and the value of a drilling rig. Now, it could be complex, you have to do your own research, but it can be an incredible investment, and I have hundreds of clients that pursue oil and gas investments for their incredible tax benefit. Number 3, retirement accounts. Now you may say, well, Mark, what do I invest in inside my retirement account that you're talking about? I'm not talking about the investment in the retirement account. And you know me, I love self-directing into alternative assets where you can invest your retirement account in anything. Please check out my other videos on that. But what the government's doing here is they've realized that Social Security isn't sufficient for every American to truly retire. A lot of people are struggling in retirement without enough savings. So the government has said, hmm, if we can create incentives to put money away into these accounts, these vehicles, and give them tax incentives to do that, maybe we can encourage Americans to be better savers. And when they start saving better, it takes pressure off the rest of us in this country and the pressure off the Social Security system. When structured right, Many people don't realize they can have multiple 401(k)s, a solo 401(k) for their small business, have a Roth account no matter what their income level is, and get tax credits to create these accounts in the first place. So let's list some of these just to get your juices flowing. Number 1, you can get a tax credit for starting a 401(k) for either yourself and your business or for your employees. It's a tax credit of $500 a year for up to 3 years, $1,500. The government gives you to just open a 401(k) before you even put any money in it. Number 2, we have the Trump accounts where parents can put money into their kids' account or grandparents into a grandkid's account of up to $5,000 before they turn 18. In fact, kids that are born in a 3-year period get an extra $1,000 from the government just to kickstart the account. And can we forget the IRA? When you put money into an IRA up to $7,500 or $8,600 depending on your age this year, you can get a tax deduction on the front page of your tax return. Oh, but then I love the Roth Roth IRA. You know, pay your taxes. You can put money into a Roth account for those same amounts and it grows tax-free and comes out tax-free. And if you've been told you make too much money, please Google after watching this video, the backdoor Roth IRA, Mark Kohler, and watch some other videos on how to put money into a Roth through the backdoor method if you make too much money. And then finally, these 401(k)s. This year you can put up to $24,500 or even $8,000 more on top of that depending on your age. And you can Play in the 401(k) at work and get the match, and then you can set up your own solo 401(k) for your small business. And if you do have employees, you can set up what's called a Safe Harbor 401(k) and get tax credits to form it. And then when you fund it, you get a complete tax deduction helping your employees, and you too can play in the game. And at the end of the day, you can structure all of these in a creative way to reduce your taxes, grow money tax-free, and withdraw strategically later. Now, number 4, let's talk about healthcare for a minute. First, we have the health savings account. Ho ho ho, I love the health savings account. Any of you that have followed me for any time at all know how much I love the health savings account or HSA. You get a tax deduction on the way in, it grows tax-free, it comes out tax-free for any medical expense, and that list is long. And you don't have to wait till you're 59 and a half. You can start pulling out money immediately. You can self-direct your HSA and invest it in anything you'd like. This year, you can put in anywhere from $4,400 to $10,750. Depending on whether you're single, head of household, married, and your age. I love the health savings account to build wealth. And why does the government do this? Because the number one reason people claim bankruptcy in this country are for medical costs. It's scary out there. And another one I love is for small business owners. If you're covering at least 50% of your employees' health insurance premiums, you can take a tax credit dollar for dollar of up to 35% of what you're spending. This is crazy. So whether it's the HSA or you're a small business owner with employees, there's money to be saved and made when we look at healthcare expenses strategically. Number 5, I want to talk about education expenses. For those already going to school, there's American Opportunity Credit, the Lifetime Learning Credit, and ways to get tax incentives for paying for tuition and the cost of going to college. But for parents, it can even be better because if we can think ahead and the government wants to incentivize this because of the cost of college nowadays, We have the Coverdell, an educational IRA where you can put $2,000 away, invest it in anything, and that money grows tax-free and comes out tax-free for college. And we have the 529 account, a way where this year you could put up to $19,000 into it for any beneficiary you designate, and that grows tax-free and comes out tax-free for college. So if in your strategic plan you need to be looking at education expenses in the future or have them now, There's ways to save taxes and build more wealth by having the government help subsidize that college experience. Number 6, giving money to charity. Well, I think that's an investment of sorts. You're trying to invest in people, our community, our country. We want to help our fellow man. And if we give money to charity, oof, there are so many different ways to get a tax benefit. You in fact can even create your own charity. At our law firm, we set up charities every month for clients around the country. Foundations, public charities, private charities, all of the above. And why do people do this? Well, hopefully, and I think first and foremost, they want to make the world a better place. But number two, they get a tax incentive, and the government is very generous with this. We even have the charitable remainder trust that we talk about all the time that help people save taxes when they have huge capital gains, sometimes paying no tax at all if they put together a plan to benefit charity now or when they die. If any of that sounds interesting, please make an appointment with one of our lawyers in the link down below, because I'm sure you'll be surprised at what your options can be. Now, number 7 for me is a big catch-all and one of my favorites. I wanted to save it for last, and that is starting a small business. When you start a small business, somebody say, well, that's not investment, Mark. You're starting an income opportunity. Well, I might argue that you're investing in yourself. You're investing in the American dream. You're investing in our country. Because when you start a small business, it has a massive ripple effect. What you pay for with other vendors creates income for other people and families. The service you provide or product you sell is going to have a benefit for people, we hope. And then the profit you make, where are you going to invest that and change other lives in your family and yourself? So when you invest in yourself by starting a small business, the list of tax benefits and strategies are really, I, I don't think you can count them all. Of course, there's gonna be business tax credits like the Employee Retention Tax Credit, hiring the right employees. The government will pay you to hire certain employees and help train people to have a new job. There's the Research and Development Tax Credit for coming up with new ideas. There's tax incentives for using energy efficient equipment and vehicles and fuel cost credits. There's tax benefits for putting in handicap access and other disabled benefits in your business. And then all the incredible tax write-offs that come with trying to create business income. You'll pay less tax starting a small business and making money in that than you will getting a W-2 working for someone else. Now, that doesn't mean you don't do both. It doesn't mean you quit your day job. Most of my most successful clients have both a day job and the side hustle or main hustle. And if they're married, they've got that combination of both benefits, stability, regular income. And then the small business owner that's going to have income up and down and building wealth brought together perfectly. The tax incentives are amazing. So the real strategy, and this is what matters, here's what I want you to take away from all of this. The IRS is not randomly giving out tax breaks. They're rewarding behavior. So the real question becomes, are you doing what the tax code rewards or are you stuck in a default cycle? Earn income, pay tax, repeat. Because those are two completely different financial paths. So the big mistake most people make is when they face a big tax bill, they think, I just need a better CPA. No, you just need a better strategy because tax savings doesn't start with your accountant. It starts with your decisions and your knowledge. What you invest in, what you study, what you learn about, how you structure it and how you execute it is where the real leverage is. So if you feel like you're working hard, making money, but still losing a huge chunk of it to taxes, it's probably not because you're doing something wrong. It's because no one showed you how the system actually works. And once you understand the tax code, it's set of incentives, and that it's not just a set of rules, everything changes. That's probably why you're here watching this video. I want to give you as many strategies and ideas and potential changes that you'll make into your life that will make your American dream more possible and save you more in taxes. So if you want help building a tax strategy that actually aligns with what the IRS is incentivizing, whether that's structuring your business, investing in real estate, oil and gas, or charitable giving, all of these strategies, our team at KKOS Lawyers can help. We work with business owners and investors every day to design proactive legal tax strategies that keep more money in your pocket to help you better live the American dream. Check out the link in the description to learn more and get started. And if you found this video helpful, hit the like button, subscribe, and turn on notifications so you don't miss future videos. I'm Mark J. Kohler. Thanks for watching, and I'll see you in the next one.