Once had a guy mention i should rent a bunch of cars then rent them out to make money.
Wouldn't that ruin your credit? "Hell yeah"
I'm financially illiterate so can someone explain to me if...
Would this actually work?
If so, I much legal trouble can I get in?
If you’re rich, this is good and noble accounting. If you’re poor, this is tax evasion.
Since the business finances are separate from the individuals/family they would have to pay the business with their personal funds, basically just paying taxes on all of their income twice.
The rich definitely do not do that
You have to have enough income and deductible expenditures to where your itemized deductions would be greater than the standard deduction of $24K, which will not be the case for the overwhelming majority of people
Even so. Doing well for themselves middle class American: tax evasion. The rich: well they’re just really smart business people and we should worship them!
If I were an IRS agent, I'd just hang out on these forums and start sending people catfishing messages.
The problem is that these people have no way to pay their back taxes except rusted out old trucks and dilapidated huts. Then our billionaire overlords get away with murder even more despite actually having the resources to pay for their shit since it's another is agent not working the big, difficult case.
That's simply not true. Most SovCits are not impoverished like that. If they were, they wouldn't spend thousands of dollars to find the cheat code out of paying child support.
Source.
Well that does fit that petty tyrant attitude.
Getting people to pay the taxes they owe as members of society is so tyrannical, isn't it? Clearly the non-tyrannical thing would be to let people just get away with being leeches.
Yeah sure, ~~work~~ worry about your feelings rather then do their actual job. Seems petty and tyrannical to me. Maybe, I dunno collect taxes instead of trolling assholes or something you know... Worthwhile.
Still waiting on that ban explanation btw bud.
Since you haven't taken the hint yet and you are now violating Lemmy ToS and harassing me about something that didn't even happen in this community: you're not going to get any more explanation than the one you already got.
Now stop harassing me or I will go to the admin about it.
you are now violating Lemmy ToS and harassing me
Jesus fucking Christ you're not being harassed. Go touch some fucking grass, weirdo.
I guess all of their comments were removed and they were banned because of how non-harassing they were.
Sometimes I give them silly advice. Not anything that would actually cause a problem, but just saying they need to find a certain stamp for the document to be valid or whatever.
This is like that Seinfeld segment about "writing it off".
For those not aware, you can typically only write off the taxes you owe to the government, and only in certain situations where that's allowed.
You see US tax law is so complicated and I know so little about it that I don't know if this would work or not. I'm guessing somehow not unless you're rich.
Many business owners that I know do a lite version of this. Going out to eat? Discuss work for 5 minutes, then you can call it a business meeting and avoid paying taxes on the meal. Driving to and from work? Gas is a write off. Buying supplies for the office? Tax free, and maybe some of the supplies make it home with you.
That's fraud. The 5 minute business discussion can be written off, the remaining (let's say) 55 minutes cannot. Maybe it differs where you live, but where I do only travel between work destinations can be written off, so home to work doesn't count. Buying supplies for the office is a normal and valid expense, taking them home is theft and/or taxable
I know a guy (independent contractor) who formed a 1-man corporation and paid himself out of it as an employee. Saved a ton on taxes.
It's pretty common to form an LLC for your own, self run business even at one person. The business makes all the money, you pay your "employee" (you) a small amount and you save on taxes. Wife does this, her employee paycheck is like $25k/year.
If you ever have a friend who's not doing this, tell them to get a good accountant lol
This is so dumb I can’t believe people aren’t getting audited left and right.
A single member LLC is simply you. All the income becomes your income. It doesn’t matter if you pay yourself through a draw or not. If you’re finding ways to get your write offs over the standard deduction without spending a bunch on actual business related expenses, you’re probably doing it wrong and committing tax evasion, plain and simple.
Look into piercing the veil.
2017 tax law changed this
One of the law’s changes allowed owners of pass-through businesses—partnerships, sole proprietorships, and S corporations—to deduct 20 percent of their qualified business income (QBI) when calculating their taxes.
Edit: Better source https://www.irs.gov/newsroom/tax-cuts-and-jobs-act-provision-11011-section-199a-qualified-business-income-deduction-faqs
That 20% is not in addition to the standard deduction. It only comes into play if your total deductions exceed the standard deduction.
Correct.
There are still benefits to an LLC if you're alone. Suggesting that everyone is committing tax fraud is speculative at best. Fun fact, she actually was audited for 2017-2019 because of shit her ex husband did, and no tax fraud (on her part, he was definitely guilty and we successfully argued for Innocent Spouse Relief). You can also pay yourself dividends which are taxed at a lower rate, though the IRS checks this income to make sure you aren't using this stupidly.
Generally, you're protected with your assets, piercing the veil can only occur if there's egregious fraud and clearly no separation between yourself and the business. Just keep your business and personal accounts separate and you'll have the legal protections.
Edit: I went back and asked her and there's definitely tax benefits, she files as an s corp and it saves a bunch on taxes. It's more expensive to file so the income must be over like $70k-$80k to really make it worth it.
It doesn’t have to be egregious. I seriously doubt she has legitimate business expenses above $29,200, assuming you’re filing jointly.
Sorry, a bit frustrated as someone who does everything above board but sees all these pavement princess 4x4 lifted trucks running around with commercial bumper stickers who clearly aren’t running a real business.
She does exceed that in cost of goods sold actually, we have whole ass pallets of wood slices in the garage. She makes a $15k order alone every year for Christmas.
If it helps, we don't deduct anything for our vehicles. We technically could do miles or gas for travel to shows but it's relatively little.
Yeah, this is essentially contracting.
Alongside settling yourself up as a limited company, you also make not only your taxes much simpler to do, but getting shit like indemnity insurance is easy as a company - but very challenging to do as a sole trader.
Step 1: Use credit card.
Step 2: Get a loan to pay the credit card off.
Step 3: Get another loan to pay that one off.
Step 4: Get another credit card.
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