How to defer US taxes
taylor.town
How to defer US taxes
1–10 of 186 posts
Re: How to defer US taxes
#2> 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.
Re: How to defer US taxes
#3I'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.
Re: How to defer US taxes
#4If 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.
Re: How to defer US taxes
#5This feels like a great way to get audited by the IRS. It does not feel like sound advice.
Re: How to defer US taxes
#6> 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…
Can you elaborate? As a business owner in the U.S. I can opt to reinvest all revenue back into the business, thus would show zero net profit but (presumably) increase my company’s value. (And remember there are other taxes and fees paid to various governments, not just tax on income/profit, so it’s not typically like nothing gets paid.)
Re: How to defer US taxes
#7I'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 s…
Because of cost basis step up at death, you can just defer forever.
Re: How to defer US taxes
#8> 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…
This is true for most businesses (they will reclassify it as a "hobby" where expenses aren't deductible, though you can fight that in tax court or real court if you want to) - but for rental properties you can go for decades with no profits (because of depreciation).
Re: How to defer US taxes
#9Pretty 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).
Re: How to defer US taxes
#10I'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 s…
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 pay taxes on the capital gain.