How to avoid paying taxes to traders

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Is it possible for a trader not to pay taxes?

Over the past 20-25 years, the post-Soviet republics are trying to create the appearance of civilized countries with developed market economies. And if in such industries as the production and trade in manufactured goods or food products, in principle it is not difficult to do this, then in those areas of activity in which we have never been engaged in our countries, the most unpredictable problems often arise. Moreover, on the background of corruption, squandering of state funds, nepotism in the highest echelons of power and false promises of officials, our fellow citizens, in principle, refuse to pay taxes. Why does an entrepreneur who works around the clock, is not getting enough sleep, does not devote enough time to the family, creates new jobs, etc. will give a substantial part of their money earned to the state budget, from where they will go into the pockets of those in power, and not to build schools , roads, salaries of teachers, doctors or training of young promising personnel? But in this review, we are interested in the fate of the income of domestic traders. After all, they do not always make a profit, and tax inspectors somehow don’t care about such problems for those who love online trading. But in this case, the main idea of ​​the presented article is to show the legal methods of not paying taxes to fans of online trading.

What TranferWISE offers to users

A year and a half ago, a well-known international company offered its users a service that interested a huge number of traders and other professionals in the provision of financial services. By opening a Borderless account, the client was able to make international payments, so as if they had an account in one local bank. People who have never been involved in banking may not immediately realize the benefits of this service. But imagine, you can store and convert, for example, 15 different currencies on your virtual account. And at the same time apply for opening an account number in the US states, UK, France, etc. You will get a full-fledged European bank account in your name with an IBAN code. At the same time a plastic card will be attached to the account for withdrawing cash or paying for purchases. For example, a service user receives an Australian account number and BSB code as if he lived in that country. After all, it is not only convenient for companies that are engaged in international business, this service is protected by residents of one country from the “persistent curiosity” of “native” tax services.

TranferWISE is one of the safest intermediaries for international bank transfers. The company has the lowest interest for its services, while the listed positive points do not affect the speed of transactions. Clients can use applications that support the work of modern mobile devices on TranferWISE.

Among the key advantages of the presented service, independent experts point out:

в—Џ High security service.

в—Џ Presence of controlling organizations (FCA and HTC in the UK).

в—Џ 256-bit SSL encryption.

в—Џ Quick translations.

в—Џ Efficiency and transparency of transactions.

Without any risk, our traders can register with the represented company and open a US savings bank account, which gives the right to use both cash and make purchases using a plastic card.

If all of the above information sounds very encouraging for domestic traders (earned decent money on the trading platform, and after a few days they are already in the account with which our tax authorities simply do not want to “mess around”). In order to get access first to TranferWISE, and then to the account, it is necessary to issue a huge amount of papers, obtain permission from the Procurators, etc. But when it comes to a trader who earned several thousand dollars on the trading floor, his personality is unlikely to attract the attention of tax service employees. But even in this “barrel of honey”, there is a decent “fly in the ointment”: verification of users and substantiation of the origin of the company’s client’s capital can become a serious obstacle for our countrymen. Although practice shows that our traders are able to find a way out of almost any situation.

Exactly the same situation is with traders who transferred their money to an American checking bank account. By the way, the above methods are considered to be one of the easiest methods to obtain a plastic card of the United States for non-residents of this country.

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What does tax law say?

You do not need to be a great specialist in tax matters to make a fairly simple deduction. If during the year you received $ 20 thousand, making deals on trading platforms, but invested 30 thousand during this period, it means that your net loss amounted to $ 10,000, that is, you did not earn any profit, which means you pay taxes do not. Although, on the other hand, experienced lawyers recommend to open the Borderless account to use the British account number and the sorting code to hold all available funds (in this case, rephrase the well-known proverb: hid money in England, sleep well).

It is very bad that in our country there is no fair legislation in this sector of the economy. Many traders would be happy to pay taxes on REAL-PROFITS, but most likely our deputies do not understand what online trading is, how to determine the tax base, what rates will be acceptable, etc.

Payoneer is an alternative way to solve financial issues for freelancers, traders, brokers and analysts.

By registering an account with Payoneer, you get the opportunity to accept / send payments using the service of one of the most reliable US companies. Registration is absolutely free, both legal entities and individuals can become a company user. In the process of work, even if you are not a taxpayer in our country, no one will forbid you to conduct commercial operations using the services of Payoneer.

“General Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.”

How Fortune 500 Companies Avoid Paying Income Tax

On paper, the United States has the highest corporate income tax, at 35%, amongst all of the OECD industrialized nations. President Donald Trump has promised to cut that rate to 15% even as he has boasted that his corporate empire has managed to pay little to no income tax in some years. Yet, he is not alone, as hardly any company pays the full 35%, as indicated in a recent New York Times article. Some companies have even managed to pay absolutely zero in income taxes, and no, it is not because they weren’t profitable. (For more, see: How Trump’s Proposals Can Impact Your Taxes.)

The Real Tax Bill

The Institute on Taxation and Economic Policy (ITEP), in a recent study, found that over the eight-year period from 2008 to 2020, 258 profitable Fortune 500 companies paid an average effective federal income tax rate of 21.2%. Over that same period, exactly 18 companies, including General Electric, International Paper, Priceline.com and PG&E Corp., avoided paying a single penny of federal income tax.

The complete list of the 18 corporations is listed below in a graphic from ITEP’s report:

A total of 100 companies avoided paying income taxes in at least one year between 2008 and 2020, and their combined pretax income during that period totaled $336 billion. Yet, instead of paying $118 billion according to the 35% statutory income tax rate, the number of tax breaks applicable to these companies allowed them to earn a negative effective tax rate. That means they actually earned more in their after-tax income than in their pretax income, often due to tax rebates from the U.S. Treasury.

How to Avoid Taxes

There are several major ways that corporations avoid paying taxes, or manage to earn tax subsidies. One way is through finding ways to shift U.S. profits to foreign subsidiaries in countries with lower tax rates, a practice known as offshore tax sheltering.

Another way is through the use of accelerated depreciation. The relative degree of freedom in tax laws has allowed companies to expense the cost of their capital at a faster pace than it actually wears out. This allows a company to declare less income and thus defer paying taxes until later years, and as long as the company continues to invest, the deferral of taxes can continue for an indefinite amount of time.

The giving of stock options to employees, as a part of their compensation, is another avenue that has helped companies reduce their total tax bill. When the options are exercised, the difference between what employees pay for the stock and its market value can be claimed for a tax deduction.

Finally, some industries such as research, oil and gas drilling, ethanol production, alternative energy, video game and film production, are privileged by the federal tax code to receive certain tax breaks.

4 Costly Strategies People Use to Avoid Paying Taxes

Can you really avoid paying taxes?

It’s a question that comes up at tax time every year. People want to pay less to the government and save as much money as they can. You can’t avoid the IRS, but you can take steps to protect your income.

Credits and deductions can reduce your tax bill if you’ve earned them. However, that doesn’t mean every tax-saving tactic is right for you. For instance, some people go so far as to invest money in something that saves taxes on the front end but costs them more in the long run.

That’s why it’s always a smart move to talk with a tax professional to ensure you understand how your investments impact your taxes.

Related: Not sure if your financial situation needs a tax pro’s guidance? Take this free quiz to find out!

Don’t Use These Strategies to Avoid Paying Taxes

We’re all about saving money on taxes. But not all tax-saving strategies are created equal. Let’s take a closer look at four common ways people try to avoid paying taxes—and why none of them are a good idea for tax savings alone.

1. Opening a Traditional IRA

Some people looking for a way to put themselves in a lower tax bracket will open a traditional IRA and write off whatever money they put in there. While saving money’s great, there is a problem with this strategy.

Any money that goes into a traditional IRA is tax-deferred, which means you pay taxes on it when you take it out. At that point, your nest egg will most likely be much bigger. So you’re saving a little money on taxes now only to pay a lot more of it later. That’s not the best deal!

If you want to save for retirement, the first place you should put money is into a matching 401(k) plan. Even if it’s tax-deferred, you’re still getting free cash. If you have a Roth 401(k) option at work, go for it because it means your money will grow tax free. If not, invest up to your match, then open a Roth IRA so you don’t miss out on the opportunity to enjoy tax-free growth.

2. Buying an Annuity

Keeping with the investing theme, an annuity is simply a savings account with an insurance company. It can be tax-sheltered, but the problem is that you usually pay an extra fee to get that shelter. Sure, you save on taxes, but those savings cost you.

The only time it might be good to use a variable annuity is when you’ve maxed out all other retirement savings and your house is paid for, and most people aren’t there yet. Don’t open one just to save on tax day.

3. Saving Money in a Whole Life Insurance Policy

A salesman might pitch to you that the interest accumulated on the savings portion of a whole life or cash value policy does so free of taxes, so it’s good to save your money there. However, that “good” isn’t just bad—it’s ugly.

Here’s why whole life insurance policies are a bad investment:

  • Whole life insurance policies are notorious for bringing low rates of return. You could earn much more by investing in good growth stock mutual funds instead.
  • When you die, your family only receives the face value of your whole life insurance policy. All that money you saved inside the insurance plan? Gone.

Don’t choose a bad insurance product just to avoid taxes. Instead, invest in tax-favored retirement plans, like a Roth IRA or your workplace 401(k). You’ll still get tax breaks for your contributions—without the subpar rate of return.

4. Keeping the Mortgage Too Long

This one is a little more long-term, but it’s important to address. Don’t keep a mortgage just to save on taxes. The deduction you get for mortgage interest isn’t dollar-for-dollar, so you’ll pay more in interest than you save with Uncle Sam.

Let’s say you have a $200,000 mortgage at an interest rate of 5% and fall into the 25% tax bracket.

  • Keep the mortgage, and you’ll pay $10,000 a year in interest and save $2,500 in taxes.
  • Pay off the mortgage, and you’ll miss out on the $2,500 tax deduction but save $10,000 in interest.

Do you really think it’s smart to pay the bank $10,000 just so you can get a $2,500 tax break? We didn’t think so. Pay the mortgage off and be done with it!

Save Money With a Tax Professional You Can Trust

Dave’s tax Endorsed Local Providers (ELPs) are tax professionals who will take the time to explain your taxes and make sure you get every deduction you’re eligible to receive. Don’t wait until the tax crunch. Contact your tax pro today!

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