How Wealthy People Avoid Paying Taxes

The wealthy seem to have all kinds of tricks up their sleeves to avoid paying taxes. While some simply do not file, others have learned where the loopholes are. It may be a good idea to put some of these tricks to use to help reduce your individual tax liability.DollarBillCloseUp

Overseas Accounts

If you own a business or are a regular stock trader or investor, having an overseas account may be a good idea. However, you must be a registered resident of the country you wish to hold the account in. The business must also be registered in that country.

Frozen Assets

Freezing your assets is also known as gifting them to family members (children). This helps you avoid paying federal estate taxes. Essentially, it removes any appreciation value from the assets which prevents it from being taxed at higher rates.

Shell Companies

A shell company is one that exists only on paper. You can funnel money through this shell company through sans taxes. The company should be legal and should only provide a couple of services, if any. In most cases, shell companies are used for international operations to avoid paying taxes on profits.

Final Thoughts

Be careful when using these strategies. One false number or missed paper trail cover-up and the fun is over. The IRS will be on you and an audit will be almost immediate. If you plan to use any of these strategies, procure a financial planner and skilled accountant. They will make sure that your paperwork remains legal and your assets are protected.

Image credit: Kurtis Garbutt

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johnAbout john
Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.

Huddleston Tax CPAs of Seattle & Bellevue
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Huddleston Tax CPAs & accountants provide tax preparation, tax planning, business coaching, Quickbooks consulting, bookkeeping, payroll and business valuation services for small business. We serve Seattle, Bellevue, Redmond, Tacoma, Everett, Kent, Kirkland, Bothell, Lynnwood, Mill Creek, Shoreline, Kenmore, Lake Forest Park, Mountlake Terrace, Renton, Tukwila, Federal Way, Burien, Seatac, Mercer Island, West Seattle, Auburn, Snohomish and Mukilteo. We have a few meeting locations. Call to meet John Huddleston, J.D., LL.M., CPA, Tawni Berg, CPA, Jennifer Zhou, CPA, Jessica Chisholm, CPA or Chuck McClure, CPA. Member WSCPA.