Tax Burden Reduction

This page is not to teach you how to indulge in Tax ‘evasion’, as the term used for the illegal manoeuvres , a criminal act that can put you behind bars. Here, I intends to teach you some legal methods of reducing or eliminating ( legal tax avoidance, if you like) your taxes which resulted from ‘double taxation’.

Reducing Tax burden within the law

It is practically impossible to avoid tax, but you can reduce your taxes to minimal amount and stay within the law, Yes!

1. You can work part-time only and if you must work full-time job, it must be in a low-paying job, such that your income will offset by exceptions and deductions, so that you will have no taxable income left.

2. This next point may not make economic sense to a business minded person, but because you want to reduce your taxes to zero, convert all your investments to state and local tax exempt bonds, and also quit your job and any other activity that might generate taxable income.

3. Next, you can invest in a non passive activity, meaning that you will have to participate actively in your tax shelter, which means that you operate your own business either part-time or full-time in such a way that expenses of operating the business will offset all other income or substantial part of it, so to say.

4. Another way to reduce tax burden is to be a passive investor in a business that through accounting magic, such as depreciation will generate a ‘paper’ loss that you can use on your own tax return to IRS.

Know your Tax Status

In the business circle, as an entrepreneur, or eve as an employee, two events are or occurrence are said to be certain in life, they are death and tax. Research revealed that people hate to pay tax, may be because they feel that the government projects and programmes on ground does not equates the tax they pay or that they almost all the time changing tax rules that want or suggest to ambush the citizen through double taxation.

A good example was in 1773 when the Colonists dumped British tea into Boston Harbour, rather than paying the tax on it. In the USA, it is assumed that most Americans, if they have their ways would prefer not to give their hard earned money to the government, especially if such is considered double taxation clause. The truth is that there is no escape rout, but you can legally reduce the burden, that’s all.

If you live in America and any other country where the tax system is progressive , meaning, a situation where people who earns more money pay tax at a higher rate than people with less earning, then you may not complain much.

All you need to do as an employee is to get ready, because your employer is going to provide you with a W-2 form, while the governments-corporation that pay interest or dividends will send you a 1099 form too.