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Most people who are upper middle class, and certainly the wealthy, are all tax cheats to some degree. Fibbing on the amount of charitable gifts, the distances traveled for business deductions, etc.
There may be fibbing on those items mentioned, but to little avail. AMT will wipe out their itemized deductions anyway. Fibbing is across the board. The biggest in terms of population would be those working cash jobs/partial cash jobs. You have many people in this country that don't report making any money...yet somehow they survive and still are out working at something each day. Take home pay is 100% and all of the government subsidies are available as well.
Only if I had a great need for personal revenge...a husband who screwed me in the property settlement, a relative who stole something from me, or whatever.
Other than that...no. Most people who are upper middle class, and certainly the wealthy, are all tax cheats to some degree. Fibbing on the amount of charitable gifts, the distances traveled for business deductions, etc.
I prefer to mind my own business.
That's painting with an awfully broad brush. Most Americans are hard working people who do pay their taxes. Some 10-15% are thought to cheat to some degree. But the rest of us really do pay our taxes.
there were many problems in my marriage of 13 years.
the "straw that broke the camels back" and brought down the whole house of cards
was cheating on taxes.
i said no we can not do that.
he said yes we can and it's not going to stop.
i ended the marriage.
the principle involved was that he had no problem with lie cheat and steal.
i could not live my life and base my marriage on that.
Yes, but only if the payout is going to be big enough for me. The law grants a certain percentage of back taxes that are repaid that the IRS becomes aware of thanks to "snitches," but I wouldn't concern myself with such for a low dollar amount.
There may be fibbing on those items mentioned, but to little avail. AMT will wipe out their itemized deductions anyway. Fibbing is across the board. The biggest in terms of population would be those working cash jobs/partial cash jobs. You have many people in this country that don't report making any money...yet somehow they survive and still are out working at something each day. Take home pay is 100% and all of the government subsidies are available as well.
The poor and working class neither earn enough nor owe enough taxes for any non-reporting of tips to account to much. But that does go on. But come on...we're talking a few bucks for someone making $6/hr. Hardly the same.
No, AMT doesn't wipe everything out. You can give up to so much in charitable deductions, or have other "deductions", up to a point...so taxpayers often "make sure" they have that, w/o AMT kicking in.
But yes, a lot of people fudge a bit on tax returns. I'm not speaking of what I would call out and out fraud. That old dress she gave to charity? She values that at $75 (its value is $5.00).
I would, although I would hope I never have to deal with that issue. But please, define tax "cheat" Gray areas may seem like cheating to some where in truth it's legitimate holes in the tax code to take advantage of until a court case lays down the law.
Nope. High percentage of congressmen and senators cheat. Ask Obama. His pick for treasury Secretary owed over $30,000.
Ask Trump. Three of his appointees each owe $50,000 in back taxes. And his pick for White House office of Management & Budget, of all things. hadn't paid $15k.
A number of Obama low level aides owed back taxes.
A number of Bush appointees owed back taxes.
And on and on. They're all wealthy, so there's gold in them thar tax evasion hills. Apparently they get away with it.
I would, although I would hope I never have to deal with that issue. But please, define tax "cheat" Gray areas may seem like cheating to some where in truth it's legitimate holes in the tax code to take advantage of until a court case lays down the law.
I"m talking about tax evasion which is a crime. Tax avoidance is not, that's when your structure your affairs and the timing of transactions to achieve legitimate tax outcomes.
Stated best by Judge Learned Hand in one of his many famous quotes:
"Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes."
Gregory v. Helvering, 69 F.2d 809, 810 (2d Cir. 1934)
So tax evasion, a crime, is when you earn money and don't report it. If he was still alive, Al Capone could tell you a thing or two about tax evasion. And, he could tell you what life was like living at Alcatraz.
The poor and working class neither earn enough nor owe enough taxes for any non-reporting of tips to account to much. But that does go on. But come on...we're talking a few bucks for someone making $6/hr. Hardly the same.
No, AMT doesn't wipe everything out. You can give up to so much in charitable deductions, or have other "deductions", up to a point...so taxpayers often "make sure" they have that, w/o AMT kicking in.
But yes, a lot of people fudge a bit on tax returns. I'm not speaking of what I would call out and out fraud. That old dress she gave to charity? She values that at $75 (its value is $5.00).
The argument was that the upper middle class were all fibbing. My counter was that poverty class was as well. If it were up to me I'd put everyone on a $30K standard deduction and let the rates start from there. But its up to Congress, not me. They make the rules. However the poor may not be chased, but that doesn't mean they fib less. If anything, I'd expect the upper middle class to be more conservative as they have something to lose and like have real tax professionals preparing their taxes.
As for the dress, even at $75, that's a lot of freaking dresses to make up the lost state income taxes paid...literally allowing tax on the tax. Besides, was your wife's cost basis in the dress higher than $5? Did you get a deduction for the depreciation on the dress? Did you get a refund on the sales tax paid when new? At the end of the day if your receipt says $75, and the charity that takes it (which doesn't have to pay) uses the non-existent valuation standards as Congress has made into law? Yes...so you're all good. But AMT is still going to wipe you out overall.
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AMT STRUCTURE
After calculating their regular income tax, many middle- and upper-income taxpayers must add a number of AMT “preference items” to their taxable income, subtract an AMT exemption amount, and recalculate their tax using the AMT tax rate structure. AMT liability is the excess, if any, of this amount over the amount of tax owed under the regular income tax rules.
AMT preference items include the deduction for state and local taxes (62 percent of all preferences in 2012 according to Treasury data), personal exemptions (21 percent), the deduction for miscellaneous business expenses (9.5 percent), and the standard deduction (0.7 percent). The AMT also has special rules for the treatment of net operating losses and depreciation.
Because the AMT disallows the state and local tax deduction and dependent exemptions, families with children who live in high-tax states are among the most likely to owe AMT. Allowing the state and local tax deduction and dependent exemptions for AMT purposes would reduce the number of households affected by the AMT from 4.8 million to just 525,000 in 2017.
The AMT has two tax rates: the first $187,800 of income above the exemption is taxed at a 26-percent rate, and income above that amount is taxed at 28 percent. The AMT exemption begins to phase out at $129,700 for singles and heads of household, $160,900 for married couples filing jointly, and $80,450 for married couples filing separate returns. Because the exemption phases out at a 25-percent rate, it creates a top effective AMT tax rate of 35 percent (125 percent of 28 percent). All dollar values are for 2017 and are indexed annually for inflation (table 1).
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