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193 votes

What dissuades people from lying about where they live in order to reduce state income taxes?

Lying to save on taxes is called tax fraud. The threat of large fines and jail-time is what prevents most people from committing tax fraud.
Hart CO's user avatar
  • 70.5k
146 votes

Making $100,000 USD per month, no idea what to do with it

If you are making that much, don't waste your time here. Pay a few hundred bucks for a consultation with a fee-only certified financial planner. (Not one of the "free" services, which make their money ...
keshlam's user avatar
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124 votes
Accepted

Our friends and we often barter babysitting time with each other. Do we owe taxes?

I wouldn't worry about it. This is from the IRS:Topic No. 420 Bartering Income Bartering is the exchange of goods or services. A barter exchange is an organization whose members contract with each ...
mhoran_psprep's user avatar
108 votes

How can I achieve a 13% U.S. Federal tax rate?

Sanders had the following itemized deductions on his 2014 return: $22,946 on home mortgage interest $14,843 on real estate taxes $9,666 on state and local income taxes $8,000 in monetary gifts to ...
Ben Miller's user avatar
  • 116k
91 votes
Accepted

selling appreciated stock vs gifting it to charity

This might be a strange notion but people donate to charity because they... want to donate to charity. That's it. Now, if you are going to donate to charity, donating an appreciated stock may be ...
NPSF3000's user avatar
  • 1,588
89 votes
Accepted

Are there in-between tax bands in the UK

You've completely misunderstood the system. Higher tax rates are only payable on the marginal income above the threshold, not on all income. If your income is £45,001 and the higher-rate threshold is £...
Mike Scott's user avatar
  • 23.5k
89 votes

Why do American dual-high-income couples get legally married?

TL/DR: Basing your life on current tax law is foolish. Tax laws will change. Personal finance is largely about emotions and behavior: math plays less of a role than one might think. Seeing a lawyer ...
Pete B.'s user avatar
  • 76.7k
83 votes

Why would the IRS ask for birth certificates or even audit a small tax return?

For people that don't earn very much, the largest single financial event of the year is often getting a large tax refund thanks to the Earned Income Credit and the Child Tax Credit. These refundable ...
Hart CO's user avatar
  • 70.5k
79 votes
Accepted

Is it worth filing taxes if I only worked an internship?

With $5k in income, you'd probably get all $400 in federal tax back, since the standard deduction would reduce your taxable income to $0. You might qualify for refundable tax credits, too, which is ...
Patrick87's user avatar
  • 2,306
76 votes

What do I do if my income is just a little too high for "free file"?

What they're charging you $30 for is the ability to get your refund sooner. If you don't want to pay for that ability, then maybe it's time for you to learn to do taxes the old fashioned way (kinda)....
Harper - Reinstate Monica's user avatar
74 votes
Accepted

Is one spouse responsible if other failed to file taxes

The IRS has a concept of Innocent Spouse Relief which is intended to handle situations like this. They describe it thoroughly on their website. A married couple technically both have responsibility ...
dwizum's user avatar
  • 17k
70 votes
Accepted

Do I have to pay income tax if I don't get paid in USD?

You owe as if it converted immediately to USD. When you are paid in other currencies - Euros, Bitcoin, gold, actual chickens - you are required to do an immediate valuation in USD at the contemporary ...
Harper - Reinstate Monica's user avatar
69 votes

Is the Standard Deduction better than Itemized when both are the same amount?

Another reason to use standard: audit If you get selected for an audit of your itemized deduction or a specific category (e.g. all medical expenses or all charitable contributions) then at best you ...
Damila's user avatar
  • 1,327
68 votes

Am I comparing take-home pay correctly?

In the US (and realistically every other country in the world that has graduated income tax brackets), the marginal rate applies only to income in that bracket, not all income. The intention of the ...
Justin Cave's user avatar
  • 27.3k
67 votes
Accepted

If a kid makes money, do the parents take on the tax liability?

Operating a lemonade stand would count as self-employment, and if they earned more than $400 they would be required to file a tax return. In this case, the income is too low for there to be any income ...
Hart CO's user avatar
  • 70.5k
63 votes

How do tax brackets work? Do they yield significantly different results than a continuous curve?

However, my marginal tax rate jumps up by 5.5%, which is not minuscule. Although it is true that your marginal tax rate jumps as you go up in income to the next bracket, your effective tax rate, ...
Ben Miller's user avatar
  • 116k
61 votes
Accepted

I claim one and my wife claimed zero on our W-4s, but we still owe...why?

The W-4 functions best when there is a single earner with a single job. When there are multiple earners and/or multiple jobs per earner, it doesn't function quite as well (without additional ...
Derek's user avatar
  • 841
61 votes

Minimize taxes now that I earn more

Congratulations on an amazing rise on salary. Please pat yourself on the back for such an accomplishment. The best thing you can do is to hire a competent tax specialist. Here in the US, it is ...
Pete B.'s user avatar
  • 76.7k
61 votes

Did I discover an easy way to make money via PayPal and cashback credit card? If so, is it legal and is the money taxable?

Update (2022): It may be possible to earn double cash back for new accounts in the first year. I cannot find anything in the terms or conditions that would exclude this. If that's the case and you ...
TTT's user avatar
  • 47.2k
61 votes

Paying $185k back rent to sister - can I claim in taxes?

This is way too complex for a DIY. You need an attorney ASAP. With the amounts involved (hundreds of thousands of dollars), you may be able to get an attorney on commission (i.e.: you don't pay ...
littleadv's user avatar
  • 177k
59 votes
Accepted

Making $100,000 USD per month, no idea what to do with it

I know your "pain". But don't worry about investing the money right now -- leave it uninvested in the short term. You have other stuff you need to school up on. Investment will come, and it's not ...
Harper - Reinstate Monica's user avatar
59 votes

What dissuades people from lying about where they live in order to reduce state income taxes?

The very short version is "laws". The more helpful version is that every state has its own taxation requirements. For instance, if you work in Illinois you are required to file appropriate forms ...
BrianH's user avatar
  • 11.7k
58 votes
Accepted

How to split bills without it showing as income?

There's no need to do anything. You don't need to declare it on any tax form, and if you are ever audited by the tax authority (HMRC), just explain what happened. Repayment of a debt/sharing an ...
GS - Apologise to Monica's user avatar
57 votes

How can I achieve a 13% U.S. Federal tax rate?

There are two big problems with your complaint from the start: You are comparing federal taxes with total taxes, and you compare the tax rate with the marginal tax rate. Normally you pay a low tax ...
gnasher729's user avatar
  • 23.3k
57 votes
Accepted

What is the best way to pay large tax amount owed to IRS?

Of the options you've listed, setting up a payment plan with the IRS is the best, cheapest option. The current interest rate from the IRS is 6%. This interest rate is updated once every three months ...
Ben Miller's user avatar
  • 116k
57 votes
Accepted

Why don't you need to pay taxes on cash back bonuses?

Since you get the rewards for spending, they are effectively a reduction of your purchase price (like buying items "on sale"). For most of these rewards that are given to consumers, the IRS treats ...
nanoman's user avatar
  • 30.1k
56 votes

I hate the high taxes in NYC. Should I incorporate in or move to another state?

Whether or not you owe state income tax is determined by state residency rules. Say you work remotely for a company in Texas (no income tax state) but you spend all of your non-liesure time in NY, ...
quid's user avatar
  • 49k
55 votes
Accepted

Why is income tax generally not in a continuous "spectrum"?

Before we discuss why the system is the way it is, it needs to be pointed out that the effective tax rate is indeed continuous (although it is not mathematically smooth). The tax you pay does not ...
Ben Miller's user avatar
  • 116k
54 votes
Accepted

If my account only sells crypto, will I get taxed?

Yes, you'll be taxed. If no exchange can calculate your basis, they'll simply report to the IRS that you sold crypto and received $2000. The IRS will assume that your basis was $0 and that the whole $...
Justin Cave's user avatar
  • 27.3k
52 votes
Accepted

How to pay less tax on a high salary?

Assuming the bulk of your income comes from "earned income," your best bets are moves that lower your taxable income. You say that some of your salary goes into a 401(k). The more you contribute to ...
Daniel's user avatar
  • 5,330

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