One year I lived in three countries, so that I didn’t meet the “resident for tax purposes” criteria in any of them. I asked all three whether I had to file, all three said “no, you don’t”.
While two of them did perform withdrawals and get a sudden attack of the “Me No Comprende” when I asked about filing taxes so I’d be able to get a refund, those withdrawals totaled less than I would have paid if I’d been a resident in any of the three countries.
I would’a been happy to pay if I’d had to (hey, taxes helped put me through college, pay for my doctors, etc.), but if they don’t want my money I’m not gonna complain either!
As for funky manoeuvers, my local IRS inspectors are damn good at catching those. Doing it might be legal for one year, but it would get me in their shit list. I’d rather not be in the shit list of a group of six people, of which one is a cousin and another one his SO, you know? They’d be on my ass for-fucking-ever! With the family’s sense of humor, I’d go to a wedding and get asked for my deductibles’ invoices
I was thinking about a similar hypothetical the other day - if I won £100million on the lottery, would I take tax advice in order to reduce my tax bill on the income this would produce? Note that in the UK, lottery winnings are completely tax-free, but of course if you’ve got £100million in the bank earning £1million a year in interest, you’re going to pay a fair amount of income tax on that interest. My gut feeling is that with that kind of money, I’m set for life even after giving a substantial amount away, and while I would seek tax-efficient ways to invest/spend/distribute my money, I wouldn’t hire a tax lawyer to look for loopholes, or invest in wacky offshore schemes to try to avoid tax. So I would have to say that I wouldn’t go for the offer in the OP either. I’m happy to take advantage of tax breaks that do exist, but I’m also happy to pay my fair share.
Well, since I’ve only ever taken the standard deduction, no. If my taxes became complicated enough that I itemized my deductions . . . I’d like to think I wouldn’t take it, but depending on how my finances were at tax time, I might.
It’s easy to set up the circumstances where you pay no taxes. Don’t make any money, get rid of all taxable assets, and live in a state where there’s no sales tax. If those were the circumstances I definitely wouldn’t pay any taxes.
I would, but only for this year. I’ve been paying taxes for 50 years, and have gotten back very little compared to a lot of other people. Now my only income is Social Security, which means about $1000 a month. From that, I’m expected to pay over $3500 a year on property taxes. And this year, I’ve got some one-time medical expenses of over $2000 that Medicare and supplemental insurance don’t cover. You do the math.
That’s not really a loophole, that makes sense. Actually, that doesn’t really make sense, as I don’t see why there even should be a foreign exclusion: in my opinion, you shouldn’t have to pay any US taxes if you’re residing abroad and paying taxes in your host nation. AFAIK, the US is one of the few, if not only, countries that taxes its citizens in this manner. And to qualify for the exclusion, there are quite strict rules about how long you can be in the US in any given calendar year before you lose that exemption. That part is fine. I don’t understand why there’s any limit to begin with.
When I lived overseas, I never even came close to running into that limit, but it always seemed a bit unfair to me.
Old Oliver had it right. I have never understood the hatred of taxes. Do you like roads, schools, police, etc? Then pay your damn taxes and quit trying to be a weasel. As someone who is self-employed, I pay more than most people, and don’t whine about it.
My plan is to win the lottery, pay my taxes, and invest my living-on-the-interest money in tax-free municipal bonds. It’s my understanding that once I am living on the proceeds from those investments I will have zero taxable income.
And my intention is to report the income to the state and federal authorities as though it was taxable at the same rate as if I had received it as wages, and pay the appropriate taxes for that amount.
But you realize that the vast majority of your taxes don’t go towards these things, right?
Most police and schools funding is actually at the local level. The income tax paid to the feds mostly goes to payments to people. Old people, foreign people, sick people, poor people, etc. The two big exceptions are the interest on the debt and the military. But even those two together aren’t as much as social programs.
This is completely reasonable to object to.
But all of this is moot regarding what taxes you do pay. Of course you should work within the law to reduce the amount of tax that you pay. If it’s zero, so be it.
Yeah, I am fine supporting old people, sick people, and the military, too. Why “Of course you should work within the law to reduce the amount of tax that you pay”? It isn’t “of course” to me.
Yeah, I’d probably take advantage of it, but might alert my congress-critter to the unfairness of the law, if I understand the OP correctly. It’s tough to imagine a loophole that is right out in the open but was not intended to excuse me from paying tax.
Would I actively move money around in order to fit into some arcane loophole that wasn’t intended to allow me to move money around just to avoid tax? No. But if I’m living my life normally, and the tax law says people whose shoe size is 10.5 and have attended baseball games in at least 12 major league cities and eat at least two bananas a week don’t pay? Sure.
Hard to grasp why anyone would pay more income tax than they are legally required to. Every year I do my best to minimize the amount of income tax I pay while still filing a completely truthful income tax return. If the laws converged in such a way as to zero my tax burden, yes, I would take advantage of it.
An interesting real-life loophole happened just a few years ago.The US Treasury was trying to get $1 coins into circulation, so they had a promotion in which you could order as many $1 coins as you wanted, pay for them (dollar for dollar) with a credit card, and have them shipped to you for free. People were purchasing thousands of dollars worth of these coins using a credit card that provided frequent flier miles or some other benefit, and then when the coins arrived they would take them straight to the bank to be deposited in their account, from which they would pay the credit card bill. So people racked up shitloads of frequent flier miles, the US Treasury racked up thousands of dollars in credit card transaction fees, and very few of the coins actually went into circulation. Nobody told any lies or defrauded anyone; it was a true loophole, and had I known about it when it was happening, I probably would have taken advantage of it too.
The way I envisioned it is that there was a widely known discussion of this issue, once someone found and publicized the loophole, and lawmakers quite clearly reached a consensus that:
(a) this is not what we intended
(b) So we’ve changed the laws to get rid of this next year
(c) but we can’t change the laws to affect this year, for some reason
(d) but this is definitely legal
So it’s quite clear that:
(a) it’s legal, this year
(b) it will never be legal again, and
(c) it was in fact clearly not desired or intended by the people who made the laws, as they got rid of it as soon as they could once they found out about it.
If it’s legal for me to stop it from happening, then I’m not letting anyone take my hard-earned money. I would absolutely follow the law by not paying taxes.
I’d do it. I’m not above taking advantage of tax breaks that shouldn’t exist.
Take the adoption tax credit, which was on the order of $11,000 when my wife and I adopted the Firebug back in 2009. This tax break makes no sense at all. I could understand a tax break for adopting hard-to-adopt American kids in the foster system, because that would at least serve some public purpose. But this applied to any and all adoptions, and even most domestic adoptions aren’t like that. And we were adopting from Russia. The only Americans who benefited from this adoption were my wife and myself, and indirectly those who care about us.
But thank you all, each and every one of my fellow American taxpayers, for paying a nontrivial portion of the expenses of our bringing the Firebug back from Russia and into our family.
I can’t see any moral difference between taking advantage of the adoption tax credit and taking advantage of Max’s hypothetical setup. So of course I’d do it.
I’d do it, and I don’t see why anyone has moral pangs about it.
If that’s what I owe, that’s what I pay. I have had some real shitty tax years, and I paid my bill, just like I am supposed to. So, whatever amount shows up on the amount you owe (tax burden) or amount we owe you (tax refund), I go with it. If/when the “loophole” is closed, it won’t be there for me to take advantage of. I always pay my bill, even if I think I’m paying too much.
I am curious… For those of you that wouldn’t take advantage if it, why? You are doing nothing illegal, and as a result, your family will directly benefit from this “loophole”. Maybe that means little JR gets to go to college without having to take out a loan later on in life. Is that a bad thing?
do you folks that like paying taxes because you are part of the society ever throw in an extra $500 (arbitrary number… Pick your own) because you can afford it this year and you’d like to help?
Why the hell not?
See… If we had a flat tax (and I don’t want to argue what it would look like, except to say it would be a higher flat rate the more you make), you get rid of the IRS and the billions in overhead it costs to run that organization each year. You could chop off about 95% of the organization, because there would be one math problem for you to do on the federal tax return. We wouldn’t need things like Turbo Tax or H&R Block. Just your amount earned, and your tax owed based on that revenue.
How cool would that be? You wouldn’t have to sweat an audit, because the number would already be figured out for you, based on your earnings. You wouldn’t be able to sue because you thought you overpaid, because that’s just the way it is… it’s the law. No muss, no fuss. Here’s your bill, pay the bill.
Anyway, that’s another debate for another thread and not meant to hijack this one, sorry, I was just daydreaming there.
If dopers feel like they’re getting their money’s worth from the federal income tax they pay, they’re either in the 47%, indoctrinated, or born suckers.
