alt Hacker NewsHow to defer US taxes
Comments
Pretty good overview of how/why these deductions reduce your taxable income. Couple of things to note.
Depreciation is recaptured if you sell an asset for more than its depreciated basis. People sometimes get into trouble with this if they rapidly depreciate real estate and then sell it. Even if you sell for less than your purchase price it is possible to owe taxes.
You also aren't going to be able to pay no taxes since you do need to realize some income to pay for mortgage/rent, food, transportation, etc. I guess if you had assets you could borrow against it would be possible to pay for these using the loan proceeds (which are not taxable).
It's half price to renounce citizen ship now, but that doesn't get you out of all of the obligations.
I'm not sure to understand how deferring taxes is a better deal than paying it here and now.
Since I'm not a financial adviser, someone asked me take on which 4k projector to buy last Xmas.
I explained that the tech has improved so much lately, they've become somewhat affordable, I recommended a model and pointed ou that he would certainly get a better device next Xmas, for half the price. I thought he would follow suit given his budget was a bit below the retail price. That would just wait.
His response was he would rather go ahead and up the budget a few hundred dollars to get it right away. That projectors will surely get much better by next year, but that he, certainly, will not.
> For your leveraged investments, pay yourself in refinanced cash when your investments appreciate and/or credit rates drop.
In other words: Gamble that (1) your investments appreciate, or (2) that you will find credit rates drop when convenient.
In 1 word: Gamble.
So, either you are rich and have spare money to gamble, which sure, might be beneficial against taxes. But you could also gamble against any other sector (stocks, housing, startups...)
Or, if you are not rich, just put it in the 401k (or eq).
I do taxes for a living.
This blogspam is advocating tax fraud.
Depreciation is permitted for business assets. In order to depreciate the lawnmower, you would need to claim it as a business expense. In order to claim a business expense, you also need to have some business income (net business losses are okay, but not having any income, or having only de minimis income, is a huge red flag). And importantly, you can't use the asset for personal use. Ever.
This type of tax fraud is the #1 cause of tax penalties. And because it's fraud, it also means the IRS has an unlimited time to audit and penalize you for it.
Rich people don't defer their U.S. taxes by buying depreciable property. They do so by buying investment property like stocks, and making charitable donations.
I am a big proponent and teach my children pay as little taxes as you possibly can. Use all means available that are not fraud. So this article is a delight.
Our government in my generation failed me and my kids, they are busy in fighting wars, manufacturing crises abroad, and doing other nefarious things.
Question: can I use the means in this article to avoid my last year's tax? What asset categories are available to invest to defer my taxes, where can I learn more?
It seems to me that I'm running into more people who just don't file their taxes. They wait for the IRS to send them a letter saying how much they owe, and they just pay that.
I can't figure out the thought process of someone who finds this sensible. Maybe there isn't one.
>Death is a popular escape from deferred taxes. When you die, your obligations to the government vanish. Your heirs inherit assets/property at market value. Their assets depreciate from new cost bases.
The article only addresses a subset of economic activity. The larger portion of the adult population are wage earners or retirees, not business owners. For them, large investments in Traditional IRAs or 401k plans are most definitely not able to escape upon death the income taxes that were deferred.
> Defer US taxes by reinvesting your taxable income into the economy as business expenses, depreciating assets, etc.
Be really careful when doing this. Make sure you have a great accountant - if you go more than a few years without turning a measurable profit, your risk of being audited apparently goes up. My accountant personally cautioned me about this since my business has been in an R&D phase for 5 years so we've been showing a small loss every year. The last thing you want is for the IRS to decide you've been cheating on your taxes.
That's a great deal more complicated than our TFSA and RSP programmes, here in Canada.
If what was supposed to be your tax dollars is instead going towards giving more people work to do (and hence generate more taxes) the government will be happy.
You can’t legally reclassify all your expenses as reinvestment. The IRS will determine what is actually an expenditure, and there are rules around it.
tax penalities are low interest loans, so you can invest the money and pay the IRS the penalties at the end of the year.
Highly recommend: https://www.youtube.com/@taxleverage
It is a good thing for life, money and health, to be clear how much is enough. In money frugality always wins. These billionaires they're very miserable. Their faces show stress, worry and animosity. People say money does bring happiness. It is BS. It holds true only if there is health.
We should force cost basis to rise some % every few years, in order make tax due on unrealized gains. How would that throw a wrench into these tax deferral schemes?
Funny thing, states like CA, TX, TN going after folks who thought it good idea to register vehicles in MN and not pay their own local state sales taxes...
Please consult a real tax lawyer before even following such advice...
Why? They have skin in the game such losing their license if they do something wrong and illegal...
Or, just pay your taxes. We collectively benefit from them.
super cool
[dead]
[dead]
[dead]
[dead]
This feels like a great way to get audited by the IRS. It does not feel like sound advice.
How to Not Pay Any Taxes: don’t be American.
Living tax free is easy enough for everyone except Americans.
> If you aren't actually reinvesting capital, pay your damn taxes. Don't be an asshole.
Why? So my government has more missiles to blow up children? No thanks.
> Loaned money isn't taxable income, so you can save/spend it without affecting your tax rate.
> Death is a popular escape from deferred taxes. When you die, your obligations to the government vanish. Your heirs inherit assets/property at market value. Their assets depreciate from new cost bases.
The article talks about taxes in the USA, and I think the treatment of taxes at death is unfair by giving a significant tax advantage to people who hold assets till death, especially with the step-up basis. The way Canada handles it seems more reasonable to me:
> Capital property generally includes real estate, such as homes and cottages, investments like stocks, mutual funds or crypto-assets, and personal belongings like artwork, collections or jewelry. When a person dies, they are considered to have sold all their property just prior to death, even though there is no actual disposition or sale. This is called a deemed disposition and may result in a capital gain or capital loss
-- https://www.canada.ca/en/revenue-agency/services/tax/individ...
In exchange, Canada does not have an inheritance tax. All taxation is resolved in the estate of the deceased person before the money or assets are passed on without further taxation.