all 100% of it. On earned income, not gift or inheritance
...Via Mutual funds?
...Bonds?
...Real Estate?
...Foreign Bank accounts?
...Expatriate to another nation
IRS does not need my money any more, I no longer want to be on their mailing list or want to pay taxes anymore.
2007-02-24 15:26:27 · 10 answers · asked by Mark T 6 in Business & Finance ➔ Taxes ➔ United States
There's no way to avoid tax on earned income. Once you earn it, it's taxable. You can reduce your tax bite with deductions such as charitable donations or home mortgage interest and property taxes BUT you will have to spend money to get a tax reduction and the tax reduction will ALWAYS be less than you have to spend to get the deduction.
Salting money away in foreign accounts doesn't legally avoid taxes on the income from the deposits. Many countries have tax treaties with the US so the IRS will be aware of the income.
Even countries with strong privacy rules for bank depositors will bend when someone from the IRS or the US State Department plays the "terrorism card." Even if you're not a terrorist, don't think for a moment that that won't be tried in the current political climate.
When you deposit funds in a foreign account you run the risk of nationalization of your assets. That HAS happened to some folks -- think the Cuban Revolution, my friend. You also risk changes in their tax laws that could escalate your tax bite well above what the US would hit you for.
Any banking transaction that exceeds $10,000 is automatically reported to the US Treasury Department. It's been that way for decades and there's no way to avoid it. Although it applies to single transactions of $10k or more, banks are also required to report aggregate transactions that exceed $10k to the same recipient over a short period of time.
If you are caught carring more than $10k in cash or negotiable instruments out of the country without declaring it, it will be confiscated. Many countries have similar laws on the import of cash and negotiable instruments with the same penalty for not declaring it.
US citizens are subject to US taxes on their world-wide income so expatriation won't help you. Most countries have higher taxes than the US so it will cost you more money to do that anyway.
Mutual funds generate taxable income, as do stocks and bonds. Investments are not insured or guaranteed and loss of principal is always a risk. Sure, you get a tax break for worthless securities but $10k in worthless stocks only gets you a $2.5k tax break if you're in a 25% tax bracket so you're still $7.5k in the hole.
Real Estate CAN be a way to shield income from tax, at least for a while. A carefully built real estate portfolio can generate a positive cash flow AND a tax writeoff but you always have the risks of real estate investment such as crummy tenants, decline in real estate values, etc. When you eventually sell, you'll often face a massive tax bill though that will be taxed at lower rates as long-term capital gains.
There's no way off the IRS mailing list. Even death won't get you off their radar screen.
2007-02-24 20:03:51 · answer #1 · answered by Bostonian In MO 7 · 0⤊ 0⤋
As long as you still hold US citizenship, you are still subject to US taxes, regardless of where you expatriate to. You would need to leave the US AND give up your citizenship. However, giving up your citizenship and then you will be subject to the expatriation rules under Section 877 which will automatically assume that you are giving up your citizenship for purposes of avoiding US tax. In a nutshell, the expatriation rules will essentially keep you subject to US tax laws for an additional 10 years. You can give up your citizenship and avoid the expatriation rules, but only if you are expatriating to the country where you were born (and that country is not the US), or if you are expatriating to the country where either your mother or father was born (and that country is not the US). If you and your parents are native born citizens of the US, then you cannot avoid the expatriation rules.
2007-02-25 01:33:57 · answer #2 · answered by jseah114 6 · 3⤊ 0⤋
One doesn't avoid taxes on a large amount of money. Even if you give it all away to a recognized charity, you'd only be able to deduct part of the donations since you'd run into the limits.
If you wanted to expatriate, and also give up your citizenship, go ahead - and good luck on finding a country without taxes. There are a couple, but they might not want you.
2007-02-24 23:56:32 · answer #3 · answered by Judy 7 · 1⤊ 0⤋
Start an Internet Charity, selling junk on eBay, then take 'donations' and 'auction' them. The corporation is always showing a loss because of the Storage, (real estate) offshore. By waterfront property in Puerto Rico and sell it to Microsoft when they expand there Manufacturing Plant there.
2007-02-24 23:40:18 · answer #4 · answered by Anonymous · 0⤊ 2⤋
Off shore banking, mostly in the Bahamas. Have a really, really, good accountant. Leave the country all together.
2007-02-24 23:29:42 · answer #5 · answered by Lily 7 · 1⤊ 0⤋
Start a business and get a very good tax consultant. One of the secrets ;-)
http://www.carltoncalhoun.com
2007-02-24 23:32:21 · answer #6 · answered by Anonymous · 0⤊ 1⤋
invest in real estate rather than stocks/mutual funds. you'd only pay real estate taxes.
2007-02-24 23:45:49 · answer #7 · answered by tma 6 · 0⤊ 2⤋
I got an idea...if you don't want to support the country...then leave and you won't pay uncle sam a penny...and i am sure no one will miss you.
2007-02-24 23:34:14 · answer #8 · answered by behr28 5 · 0⤊ 2⤋
Ask Bill Clinton .. he knows all the tricks.
2007-02-24 23:29:40 · answer #9 · answered by ValleyR 7 · 1⤊ 1⤋
you can't - that's called tax evasion and it's illegal.
2007-02-25 00:14:22 · answer #10 · answered by Dizney 5 · 2⤊ 0⤋