How do rich people pay less tax?

Question

How do rich people manage to find ways of paying less tax? I read that they employ people to find ways of reducing the amount of tax they have to pay and I was wondering what kind of things they do.

Answer 1

The trick is being able to afford the cost of finding the solution, and being willing to modify their lifestyles in such a way as to get the maximum benefits. Rich people don't pay H&R Block! They have a team of lawyers, accountants, bankers, and financial advisers who co-ordinate their investments and financing to have the lowest tax possible given their lifestyle.

I worked at one point with a firm of trust advisers who had a single client: 100 some-odd related family members and their dozens of trusts created when each ancestor died. This keeps a dozen people employed managing the trusts and assets therein; and also another dozen or more of ancillary advisers who bring in specialist advice.

We'll start with citizenship and residence. You can have zero tax if you're not a US citizen and you live in a tax-haven country. However, not everyone wants to give up citizenship or live somewhere else. In that case, there are tax sheltered investments, pension plans, charities, setting up businesses, tax-advantaged financing arrangements, trusts, low-tax investments, and more. The rich don't bother learning or finding out about this stuff, they pay others to do it for them.

Answer 2

The more money you make, the more you need to defer. Putting money into a retirement account is the first way (allowed $15,000 per year for 401(k)). This will reduce taxable income. Purchase securities that would allow them to have non-cash income. If they hold the securities for more than 12 months and make money on the deal, the income is taxed as capital gain. The capital gain tax is 15% which is far less than the 35% they probably pay on ordinary income.

The rich also give to charities (sometimes) which reduces their taxable income by a certain percentage of the amount given depending on the type of charity.

Yes, they employ people like financial planners or CPAs to find ways to reduce the tax they pay.

Answer 3

Actually there are many ways. I'm just going to share the more common ones.

1) Lunch, Dinner Expense - Becomes official expense
2) Buying a car under the company's account
3) Buying a property for their own usage and state it as holiday appartment for the employees.




Regards,

Edmund Ng
CEO, Founder
Infinique Technologies
http://www.infiniquetech.com
http://www.itjobs.com.sg
http://groups.yahoo.com/group/SG_IT_Jobs
http://www.purchaseresume.com

Answer 4

Tax attorneys and accountants specialize in ways to avoid taxes, through various investments, accounts in countries with looser tax laws, real estate development, estate funds, etc.

Answer 5

i worked at a warehouse where the owners were millionaires.
at christmas they gave me 350 dollars for a gift,actually they gave me 500 but the rest went to the irs.
my friend who was there longer than me,they gave him about 1500 dollars.i think they did this to write it off,i guess.
i guess they get it back in taxes or something.

Answer 6

They have businesses and they buy things for themselves through their businesses and write the item off onto their business accounts. Also if you do renovations to investments you claim it back on tax. If you have your own business you can also get food and fuel written off onto the business too

Answer 7

They control the legislators who make the tax laws.

Answer 8

Tax shelters. That's how they protect their money. To find tax shelters, you need to hire savvy accounting firms and top flight lawyers.