this post was submitted on 16 Dec 2024
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[–] [email protected] 2 points 1 day ago

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"

[–] [email protected] 7 points 1 day ago (1 children)

I'm financially illiterate so can someone explain to me if...

  1. Would this actually work?

  2. If so, I much legal trouble can I get in?

[–] [email protected] 6 points 1 day ago (1 children)

Don't worry, the people posting those sovcit fever dreams are financially (generally?) illiterate too.

[–] [email protected] 3 points 1 day ago

It just hit me what sovcit stands for. Damn. I feel like a dumbass.

[–] [email protected] 145 points 3 days ago (2 children)

If you’re rich, this is good and noble accounting. If you’re poor, this is tax evasion.

[–] [email protected] 4 points 1 day ago (1 children)

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.

[–] [email protected] 1 points 1 day ago

The rich definitely do not do that

[–] [email protected] 47 points 2 days ago (1 children)

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

[–] [email protected] 16 points 2 days ago

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!

[–] [email protected] 57 points 3 days ago (22 children)

If I were an IRS agent, I'd just hang out on these forums and start sending people catfishing messages.

[–] [email protected] 3 points 1 day ago (1 children)

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.

[–] [email protected] 2 points 1 day ago (1 children)

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.

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[–] [email protected] 31 points 3 days ago (2 children)

An IRS agent like you will lose your job on Jan 20

[–] [email protected] 10 points 3 days ago

I know, but they've had so much time to do it.

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[–] [email protected] 18 points 3 days ago

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.

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[–] [email protected] 34 points 2 days ago

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.

[–] [email protected] 39 points 3 days ago* (last edited 3 days ago) (1 children)

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.

[–] [email protected] 38 points 3 days ago (3 children)

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.

[–] [email protected] 14 points 3 days ago (3 children)

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

[–] [email protected] 12 points 3 days ago

Last I checked in the US, the time wasn't a factor. You only get to write off 50% though - I think the assumption is that you would have had to feed yourself anyway and the extra 50% is the cost of doing so in a restaurant or for the other party's meal.

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[–] [email protected] 29 points 3 days ago (1 children)

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.

[–] [email protected] 41 points 2 days ago (7 children)

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

[–] [email protected] 0 points 1 day ago (2 children)

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.

[–] [email protected] 2 points 23 hours ago* (last edited 23 hours ago) (1 children)

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

~~https://www.americanprogress.org/article/the-2017-tax-bills-pass-through-deduction-largely-favors-the-wealthy-and-encourages-gaming-of-the-tax-code/~~

[–] [email protected] 3 points 23 hours ago (1 children)

That 20% is not in addition to the standard deduction. It only comes into play if your total deductions exceed the standard deduction.

[–] [email protected] 2 points 23 hours ago
[–] [email protected] 2 points 1 day ago* (last edited 23 hours ago) (1 children)

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.

[–] [email protected] 1 points 1 day ago (1 children)

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.

[–] [email protected] 2 points 23 hours ago

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.

[–] [email protected] 18 points 2 days ago

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.

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[–] [email protected] 29 points 3 days ago (2 children)

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.

[–] [email protected] 13 points 2 days ago

Put the credit cards in different trusts

Write it all off

[–] [email protected] 12 points 2 days ago* (last edited 2 days ago)

Hilariously, that does work for a while. The more unused credit you have, the better your credit. You would think having a half dozen credit cards hurts your credit, but nope. It's the opposite.

Opening them will hurt your credit for a short while, but moving debt from 0% interest card to 0% interest card occasionally will increase your credit. Leaving the old cards open and empty will only make youre credit rating go up. You do not, at all, have to use them to maintain them or increase your credit score.

Eventually you will have to pay, and it's entirely likely to be the worst time for you as passing the buck with debt tends to lead to building more debt, but it's possible. Credit is addictive, so they want you to have more of it.

[–] [email protected] 15 points 3 days ago

Never trust anyone or anything. Trust me.

[–] [email protected] 5 points 2 days ago

He doesn't get to the sovcit arguments for a while, but gets there in the end.

https://www.youtube.com/watch?v=lI5ANNAA_CI

[–] [email protected] 11 points 3 days ago (1 children)

What does this even mean? Can someone explain?

[–] [email protected] 26 points 3 days ago (3 children)

They're trying to avoid paying taxes by recreating the absurd Hollywood style accounting, but things don't quite work like that.

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[–] [email protected] 7 points 2 days ago

Idea stolen from wulrus, but the term is tusk, not trust. Then it work.

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