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What Does It Take To Pay Zero Taxes?
By: Wayne M. Davies
How many times have you heard someone say, "I don't pay any taxes. My accountant
takes real good care of me . . . I haven't paid a dime in taxes in years."
Does that outrageous statement sound familiar?
Maybe it's your brother-in-law, or a fellow Soccer Mom, or a co-worker at the
office.
And so you think to yourself, "What am I doing wrong? How come I'm paying taxes
and so-and-so says he/she pays nothing? How do they do it!"
Is it really possible to pay "zero taxes"?
For purposes of this article, let's give your "no-tax" friend or relative a
name. Let's call him "Charlie" (or if he is a she, just think "Charlene").
OK, what is Charlie up to? What's his secret?
Charlie has no secret. He's not doing anything that you should be doing. Do not
be envious of Charlie, and here's why . . .
I can think of at least five reasons you should ignore whatever Charlie says
about his "no-tax" situation.
REASON #1: Charlie is a liar. Every family has one, so don't feel bad. Let's
face it, some people just like to indulge in fabrications to make themselves
feel good. Charlie is telling you a big fat lie because Charlie has "issues." 'Nuff
said?
REASON #2: Charlie is pond scum. OK, hear me out on this one. I don't mean to
offend you if Charlie is a close and dear relative, or your best friend, but I'm
going to give it to you straight: Charlie cheats on his tax return, and he
cheats big time. There are plenty of folks out there like Charlie. He's one of
the reasons that you and I pay so much in taxes -- he doesn't report all his
income, and he deducts bogus expenses by the thousands.
He and his accountant may even be in cahoots on this. Charlie brings in his
records and his accountant crunches the numbers, then calls Charlie and says,
"You owe $5,000." So Charlie rummages around in his files and somehow manages to
come up with another batch of expenses that miraculously
reduce his balance due to zero. It's like magic!
End result: Charlie's tax return is a big lie.
Charlie is a thief. Charlie should be put in jail for the tens of thousands in
taxes he has illegally withheld from the government over the years.
REASON #3: Charlie is stupid. Again, I'm sorry if I'm being too hard on Charlie.
But some people are so clueless about taxes that if they have no balance due on
their return, or if they are getting a refund, they mistakenly believe they
didn't pay any tax that year.
And believe it or not, this is actually a very common misconception that
thousands of people cling to. Ah, to be so blissfully ignorant!
I hope you are not so naive to think that the "bottom line" on your tax return
tells the whole story about your tax liability. It doesn't.
REASON #4: Charlie is broke. Charlie may actually pay zero taxes because --are
you ready for this one? -- Charlie doesn't make any money!
Charlie owns a small business or works full-time at his self-employment
activity, and Charlie may rake in hundreds of thousands in income from sales of
his product or service -- but Charlie's business spends more than it brings in,
and Charlie's business has a loss every year.
So Charlie doesn't really have a tax problem. Instead Charlie has any number of
other problems. He has a marketing problem, or a management problem, or a
personnel problem. Charlie's business is failing, and paying zero taxes is just
a symptom of a business that will eventually close.
REASON #5: Charlie is just scraping by. Charlie's business may not be losing
money every year, but it's not really making much either. He has a small profit
-- enough to keep him busy. His business may even "look" profitable, but it's
really the classic shoestring operation.
So now, I ask you, do you really want to pay zero taxes? People who don't pay
taxes are usually in one of these five categories: Chronic Liars, Pond Scum,
Stupid, Broke, or Just Scraping By.
The purpose of business is to be profitable.
The unavoidable result of a profitable business is taxes. And yes, you should do
everything legally possible to reduce those taxes. But if you are going to be
successful, you are going to pay some taxes.
When it comes to taxes, stay away from Charlie.
About the Author:
Wayne M. Davies is author of 3 tax-slashing eBooks for small business owners and
the self-employed. For a free copy of Wayne's 25-page report, "How To Instantly
Double Your Deductions" visit http://www.YouSaveOnTaxes.com
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