News, They Earn $200,000 and Pay No Taxes. (tax, income, job)

[Driller1]

I did pay a huge amount of sales tax!

[evilnewbie]

Originally Posted by Driller1

In Michigan as soon as my tax was $0, I got back 85% of my property tax. Plus, a nice home heating credit, $1,200.

Umm... how can you claim $0 taxes? I am assuming you are talking about tax liability (not taxes to be paid)... I don't pay taxes either, I get back about 2-3k every year by I do have a net positive tax liability... You can't earn money and not spend it... you have to eat, pay mortgage, etc. etc. unless you do absolutely nothing when you get home and have no utilities to pay.. you have to take some out to spend...

[bale002]

Originally Posted by Driller1

When I claimed well over the $200,000 and then wrote it off on a schedule C, I did just what the IRS wanted me to do. Invest.

I think tax here refers to income tax, strictly speaking, not social security/medicare and other taxes.

Indeed, there are so many incentives in the tax code to save and invest that it is possible to have substantial revenues and pay little or no income tax as a result of adjustments, such as pension plan contributions, health care premiums, health savings accounts, child tax credits, not to mention standard and itemized deductions and personal exemptions.

Any person with common sense, reading ability, and about a week's worth of time can understand the above.

More complicated are other areas in the tax code that encourage investment, such as real estate and trust funds, etc., that require more study, probably the help of a professional.

Now, I'm not sure if Driller1, when mentioning "wrote it off on a Schedule C" meant also avoiding social security taxes, but even that is possible through direct deductibility (instant depreciation) of long-term investment up to a certain amount, which is substantial, in excess of $100,000 and I believe the recent fiscal stimulus package even raised that amount.

So, if you have a small business and save, you can invest it in pension and health plans, and other vehicles, to avoid most or all income tax, and/or in more machinery, equipment and software, possibly avoiding also social security tax.

Maybe Driller1 can elaborate.

In any case, if you make the effort to understand the tax code, as it stands now, you realize that the underlying message is to work hard, earn as much as possible, save, and invest.

To be sure, there is a lot of pork in the tax code, but the main problem is laziness, complaining, and demagoguery.

If the next Congress raises marginal tax rates and promises a bunch of hand-outs, that would take away a lot of incentives to work hard, save, and invest, and encourage expectations of more hand-outs, more laziness, more complaining (when the actual hand-outs prove to be less and of lesser quality than promised), and more demagoguery.

We'll see.

[Driller1]

I do not pay into SS. All heath insurance, when self employed is 100% deducible. I paid cash for all equipment and land. I saved over the years and kept upgrading. My depreciation is over $200,000 on equipment.

[forest beekeeper]

Originally Posted by Driller1

Our economy is based on what you keep, not what you make. When I claimed well over the $200,000 and then wrote it off on a schedule C, I did just what the IRS wanted me to do. Invest. My tax $0. BTW, they audited my 05 and 06 return, no change.

Your method of avoiding taxes, is largely my method as well.

A zero or negative AGI.

The OP is claiming folks who have a large positive AGI.

I wonder if posters here aren't confusing the two?

[Driller1]

05 was the first year with the bonus depreciation. All the costs of doing business is up too.

[forest beekeeper]

Originally Posted by evilnewbie

Umm... how can you claim $0 taxes? I am assuming you are talking about tax liability (not taxes to be paid)... I don't pay taxes either, I get back about 2-3k every year by I do have a net positive tax liability... You can't earn money and not spend it... you have to eat, pay mortgage, etc. etc. unless you do absolutely nothing when you get home and have no utilities to pay.. you have to take some out to spend...

If you had a tax obligation, and it was paid, then you did pay income taxes. Whether you received a refund or not.

I claim 'Exempt' so none is taken out from my pay checks, and we have no tax obligation at the end of each year.

In our case, we can't do it all using a schedule 'C'. We file multiple 'C's, and we also use an 'E' and an 'F'.


As for earning money and not spending it, well technically you are correct. However not everything has a sales tax.

One 'secret' that you see if you study "The Millionaire Nextdoor" is that affluence can be gained when you learn to control your spending.

Focusing your spending on items that: are not taxed; items that depreciate; items that will earn you more income.

[ChunkyMonkey]

What the article didn't tell you is that in order to claim the foreign tax credit, one must reside in a foreign country and they will be paying taxes to that country. If someone does not reside in the U.S. and not use the services why must they pay taxes?

[pghquest]

Originally Posted by John1960

Death is inevitable, but federal income taxes aren't for an increased number of high-income earners.

New IRS statistics show 7,389 federal tax returns with $200,000 or more in adjusted gross income reported no federal income taxes in 2005.

ABC News: They Earn $200,000 and Pay No Taxes

Um.. its GROSS income.. Not net. For gods sake, there is a HUGE difference. It means that they have a business generating money, but not any profit.

[pghquest]

Originally Posted by CaliBoy

Though, I will say that I wish my biggest problem was dealing with a tax burden on a 200k+ income.

There is no Tax burden on $200K of GROSS income.. it means NO profit, i.e. no tax liability