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How to defer US taxes

taylor.town

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Re: How to defer US taxes

#111

Post by hirako2000 »

dsizzle wrote: post #19
singron wrote: post #10

Earlier quoted context omitted.

Deferring taxes is essentially an interest-free loan from the government to you. You can take that money, invest it, and then keep most of the earnings when you eventually pay the taxes. There are also some loopholes where capital gains taxes deferred until after death just don't get paid at all. This is the "step-up basis" where your inheritors get to reset the basis of capital assets and neither you nor they has to…

Yes, and when you do pay it's a lower "real" tax (due to inflation)

Good point about inflation. Deferring can make sense. I was thinking what we earn today is more enjoyable to spend today than when we have bad knees and whatnot.

Re: How to defer US taxes

#112

Post by Groxx »

twoodfin wrote: post #107
fer wrote: post #106

Earlier quoted context omitted.

Because wealthy people can perform buy borrow die and poor people can't, artificially amplifying generational wealth differences.

You don’t have to be wealthy: Homes get a step up basis on inheritance like any other capital asset, and home equity loans are quite popular. Less common but not obscure financial options include borrowing against your 401(k) or other equities.

401k and home ownership count as "wealthy" in many circles. It's not "I can do whatever I want any time" wealth, but it does still mean "this is not an option for people who likely need it the most" which is the real issue.

Re: How to defer US taxes

#114

Post by OfficialTurkey »

richwater wrote: post #110
nayuki wrote: post #72

> 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 ta…

Why should the government collect taxes on jewelery I pass down to my children? I already paid income taxes on the money I used to buy it and sales tax at the point of purchase. Why the hell are they entitled to more?

I'm not an accountant or tax lawyer (in fact, I'm not any kind of lawyer). My layman's understanding is that value -- from goods and services -- is taxed when it moves between legal entities, be those people, estates, or corporations. This is not a prescriptive legal framework as far as I know, but is a descriptive framework which I have observed and which makes sense to me morally.

You paid income taxes on the money when you earned it because it left your employer's pocket and went into yours: the ownership of the value (money) has moved. You paid sales tax when you bought it because you exchanged money for the ring: the ownership of value (money, and a ring) has moved. And you pay an estate tax on it when it transfers from your estate to your children because, you guessed it, the ownership of value has moved.

Re: How to defer US taxes

#115

Post by mcmcmc »

__MatrixMan__ wrote: post #78
mcmcmc wrote: post #69

Earlier quoted context omitted.

You know that’s not the entire budget right? You’re being an asshole by denying funding for disaster relief, schools, healthcare, roads, scientific research, all the public goods and services that don’t work on a profit driven model, but you still get a direct benefit from. If you want to play concerned citizen get out and protest, vote with your dollars by not throwing them at big tech companies who kowtow to politi…

> vote with your dollars by not throwing them at big tech companies Abstaining is not voting. If you want to vote with your dollar, spend it actively undermining big tech companies. Get out there and blind some cameras or something.

> Abstaining is not voting.

Fair if you’re already not giving them money. But if you manage a sizable chunk of cloud spend at AWS, GCP, Azure etc, you can send a meaningful signal by taking away that revenue and shifting it to a company that’s not aiming for neo-feudalism.

Re: How to defer US taxes

#116

Post by twoodfin »

jaxefayo wrote: post #51
SoftTalker wrote: post #46

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.

I’ve never heard of anyone doing this, but now I kind of wish everyone did. Maybe it would force the IRS to just give us a bill instead of having us try our best to calculate what we owe, submitting that, and then hoping that we don’t get an angry letter when the IRS calculates it themselves and their answer doesn’t jive with ours.

The IRS has no idea of (for example) your primary residence or whether you’ve been attending a degree program.

It’s a lot like the old saw about Microsoft Excel: No one uses more than 20% of the features, but everyone uses a different 20%.

Re: How to defer US taxes

#117

Post by fer »

twoodfin wrote: post #107
fer wrote: post #106

Earlier quoted context omitted.

Because wealthy people can perform buy borrow die and poor people can't, artificially amplifying generational wealth differences.

You don’t have to be wealthy: Homes get a step up basis on inheritance like any other capital asset, and home equity loans are quite popular. Less common but not obscure financial options include borrowing against your 401(k) or other equities.

Talking about homes: if a wealthy person see a depreciation of the equity they have a parachute (more homes, stocks, etc), if middle class sees a depreciation of the equity they're on the street. The risk profile is absolutely not the same.

Re: How to defer US taxes

#118

Post by mcmcmc »

usefulcat wrote: post #102
codemog wrote: post #55

> 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.

The federal government can basically print money. The only reason they "need" your tax money is to limit inflation.

You’re not wrong, unchecked inflation is bad for most people though. Stable currency is pretty important for trade and economic stability. Unless you prefer heating your home by burning stacks of cash

Re: How to defer US taxes

#119

Post by 3rodents »

fer wrote: post #99
3rodents wrote: post #84

Earlier quoted context omitted.

You are categorically incorrect. Picking a random country: Italy. Please explain under what legislation or mechanism an Italian citizen who spends 3 months in Japan, 3 months in South Korea, 3 months in the U.S., 3 months in Norway and then repeats the loop for the rest of their life would owe any taxes to any tax authority? Almost every country except the United States only taxes their residents, not citizens. Almos…

Funny pick, because Italy is very strict on this. To stop being considered a tax resident in Italy you need to deregister from your municipality and register in the AIRE (Anagrafe degli Italiani Residenti all'Estero). But for the AIRE to accept your application on the Italian consulate in any of those countries you need to provide proof of permanent residence (address, work contract, company ownership, etc). If you d…

Let's pretend my random country generator didn't pick the worst possible example. I should have chosen a country I am familiar with. Let's take Germany. A German tax resident can de-register at any time, so long as they are leaving the country, without first establishing tax residency elsewhere.

Re: How to defer US taxes

#120

Post by trollbridge »

compiler-guy wrote: post #34
josefritzishere wrote: post #5

This feels like a great way to get audited by the IRS. It does not feel like sound advice.

All of these techniques are entirely routine for the average company with even a semi decent accountant, and only marginally increase the chance of an audit. You do have to be sure you follow the rules and avoid various gotchas that other people in this section have pointed out, but otherwise it is entirely legal and routine.

No kidding. It's pretty normal for a high-growth company to not turn a profit for years because they keep on taking on expenses to try to grow quickly, and this is explicitly allowed now for R&D.

Actively involved owners live off of a salary paid by the company.

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