In the course of a week, I talk to clients and TaxLoopholes Community Members who struggle to make their businesses work and others who make $1 million or more (taxable income) per year.  I review tax returns for free for people who considering becoming clients.  The vast majority of the returns are from people who make $100K - $150K per year in W-2 jobs and have bought 1-3 rental properties that lose money.  Some of them lose over $30,000 per year, before depreciation.  That’s hard cash out of their pocket every year.

I can tell you the questions they ask in my sleep:  Can I take real estate professional status?  (No)  How can I get the full write off for the rental properties?  (You can’t unless one of you quits their job) And the one that breaks my heart - I bought these properties because I went to a seminar and they said I should buy real estate.  The rent doesn’t cover the payment and now the property is worth half what I owe.  What do I do?  

And that’s when I’m stuck.  Hang in there?  Sell it, cough up the difference and move on?  Try for short sale because there are no other options?  

When you sell a property like that, you can take advantage of the losses.  So, the IRS actually rewards you for dumping the non performing properties.  

And then the next question is - How can I pay less tax?

In today’s tax world, there is only one answer.  Start a business.  How can I have more money?  Start a business.  How can I pay less tax?  Start a business.  How can I control my financial future?  Start a business.  How can I quit my job?  Start a business.

This might very well be the exception to the rule where one size does not fit all.  Starting a business is pretty much the one sure thing you can do.  And that’s the one thing that most people don’t want to do.  I think that’s because so many people have this image of how a business must operate based on the Industrial Age model - buildings, employees, shipping, inventory, etc..

Some of my clients who make the most money have NONE of those.  They might have one part-time employee and make $30,000 - $50,000 per month through Internet affiliate marketing. Or they might have an online store selling their own products with people doing drop shipping from other parts of the country.  Another of my clients is a physican with a very lucrative practice who makes more money buying and selling real estate in other countries.  His visits to the property are fully deductible and read like they came out of a high end travel magazine.  And I have my MLM clients.  I know some of my readers just shuddered.  But the fact is, again and again, I see the same path:  start in MLM, continue working the plan and within 4 years reach solid 5 figure monthly income with very little work required.  

Why is the middle class disappearing?  The economic times today call for change.  If you continue working a dying model, your income and purchasing power will shrink.  If you innovate, you will receive more income faster than you thought possible.  The choice is up to each of us.