How to Avoid Paying Taxes Without Getting Caught

Death and Taxes – Those are the two things we have always heard are certain in life. Well, death we know really is certain, but taxes do not have to be. A lot of people would like to stop paying their taxes, and in fact, a lot of people have. There are many tax schemes that people employ to avoid paying taxes that will land them in jail very quickly, but here is one that won’t. It is legal, and although it is not necessarily the easiest route to take, if you are a person who simply wants to avoid paying taxes, it can be done without you being sent to Federal prison for many years to come.

One way to avoid paying taxes without getting caught is through expatriation. You can avoid income taxes, estate taxes, and social security tax. You just need to be willing to give up your United States citizenship and moving to what is considered to be a tax haven. If you do not give up your United States citizenship then they can impose taxes on your world wide income, no matter where you live in the world. After you expatriate, then all of your future income from sources outside of the United States will not be subject to the United States taxes.

That doesn’t mean you can live anywhere in the world. Many other countries have higher taxes, so you need to find a country that has no income or estate taxes on its residents which is considered to be a tax haven country. There are many tax haven countries such as Austria, Hong Kong, Ireland, and the Cayman Islands just to name a small few. Some tax haven countries are very experienced with this sort of thing, while others are still in their infancy and do not offer as much help as you may need.

Before you can even give up your United States citizenship, you will need a passport to travel to other countries so you should become a citizen of another country first such as Canada. You just have to live there long enough to become a citizen and then you could move to a low tax country such as the Bahamas, but you most definitely need to relinquish your United States citizenship. It may not be simple but you could definitely avoid paying taxes this way.

A less extreme but just as effective way is to have a business that can be operated from any where in the world. If you, as a United States citizen, move to a foreign country and become a legal resident you can then operate your business out of that country and have up to $160,000 of your income could be taken from the business tax free. That means you will not have to prove it, nor do you have to pay taxes on it. This is the foreign earned income tax code, and the one that is the most frequently used. What is great about this method is that if your business is organized as a foreign corporation and there is no investment income earned by that corporation, you can actually have more profits then the stated $160,000 without being subject to taxes. However if you have a large estate then your estate itself would be subject to taxes. This is what is taking place when you hear about “offshore accounts.” It really is not something that just takes place in the movies. It is relatively easy to do and can net you a lot of tax free profits without ever getting caught.

A person who already has a substantial net worth can work with tax exempt bonds to avoid paying taxes. You would need to have investments of considerable measure, in the millions at least. If you do though, you can simply invest in tax exempt bonds that could make you a lot of tax free money. For example, if you invest 2 million dollars in tax exempt bonds in the state in which you live, or a state that has no income tax, they you could make about $80,000 a year with a yield rate of 4%. Sure, that may not sound like a lot if you are worth that many millions, but if you are worth $20 million then you could stand to make $800,000 a year without ever having to pay taxes. You also would not be subject to any social security taxes. That is generally a win-win situation for you if you are in the position of being worth a great deal of money.

Larger corporations are in the best position to be able to avoid paying taxes without getting caught. Many drug companies as well as high tech companies follow the first method of avoiding paying taxes by adding a little extra method for fun. They realize their profits in tax haven countries in a tax scam that is called “transfer prices.” It is a tool that almost all large corporation use to make the United States think that they have almost no profit. These are called multinational corporations and they essentially have two sets of booking which helps them to remain almost completely under the radar with the IRS and get away from paying millions in taxes. They artificially inflate the transfer price of their goods when they prepare their taxes locally which are usually a high tax jurisdiction, and then they have their other sets of books in a tax haven country which shows their true profit and loss. Basically if they can charge enough here in the United States their profits just vanish into thin air and into their corporate tax haven. Although allowed by the United States, it is the fraudulent transfer pricing that allows them to transfer the income to tax havens. Many companies are choosing to do this and are getting away with it without any hassle whatsoever.

Whatever way you choose to avoid paying taxes, you really do want to research it thoroughly before you make your decision. One wrong move and you will have the IRS breathing down your neck in no time.