Ever wonder whether it’s possible to (legitimately) not pay taxes? Tax time is coming up and that means we get to discuss my favorite topic: taxes.
Paying taxes can be an exhausting obligation. It’s really sad sometimes to see such a large portion of your income go toward something that you can’t see. Then, you pay somebody to do your taxes, taking up to 10% of your refund (if you have one) which just makes it hurt even more.
As a side note, you should be doing your own taxes. Many people think that taxes are too complicated to do themselves, but this isn’t true. Use a program that will walk you through it. I use Turbotax, which is much cheaper then an accountant and will allow you to do your entire family’s refunds. Plus, you can get the software on sale – I use Turbotax Standard .
I’m not surprised, then, that I have been asked by some readers for tips on how to not pay taxes.
While I do think all citizens paying taxes (when they are able – meaning within the parameters of the government’s taxation rules) is beneficial for the greater good of the economy, as well as the infrastructure of the cities and towns that we live in, I definitely understand the desire to keep your money.
So here we go – a few tips on how to reduce or, even not pay taxes.
Make a Low Income – You Won’t be Taxed
Don’t want to pay taxes? I met a guy one time who was serious when he told me that he worked in a low paying job because he didn’t want to pay taxes.
Depending on where you live, there is typically an amount of money that, if you make under that amount, you will not be taxed on.
Now, this completely defeats the purpose to me; even when you are taxed, if you make more money you keep more money. But it is a strategy to not pay taxes.
Use Tax Deductions and Tax Credits to Lower Your Taxes
Have dependents, going through college, or contributing to your retirement account? All of these things, plus a whole wack of other things, can reduce the amount of tax that you pay. Doing these things doesn’t mean you won’t pay taxes, but in combination with a few options you may reduce them drastically.
If you donate to a cause, you can use the amount that you donate (over a minimum amount, which will depend on your area) as a tax credit.
When I was a student, because I was full-time, I didn’t pay taxes because, despite my income being fairly high for a student, I could claim my tuition, textbooks, and education amount. Then, I’d claim my eligible donations, and then I would reduce my taxes even further by claiming my RRSP contributions.
If you Google a list of tax deductions and credits, you will likely be able to find one for taxes in your area. The Canadian Revenue Agency provides this tool to find deductions if you are Canadian.
Many people forget or don’t know that they can deduct so many of these things, including union dues, carrying charges/income expenses, moving expenses, etc.
Work For Yourself and Track Your Expenses to Claim Them at Tax Time
Because I work online so much, I am partially self employed. I can claim any expense related to my self employment. For instance, part of my home being my home office, the conference I went to in July about blogging, my internet bill because I use my internet almost solely for blogging and work purposes, my Adobe Illustrator purchase because I use it for my online business.
Be sure to track every single expense, including the gas it takes to drive to a business meeting, if you take a client out for lunch, if you outsource anything.
If you do end up spending more than you make for your business, there is something seriously wrong, but you can reduce taxes quite a bit by ensuring you are tracking all of your expenses.
Illegal: Work Under the Table
Of course this is an illegal option that I am most certainly not condoning (if you do this, you are leaching off of your country without contributing), you can work “under the table” to avoid paying taxes.
I was surprised to hear from my friend’s husband that apparently there are a lot of companies looking to hire people under the table so they can save money, too.
Be aware, however, that this is shady – you won’t be getting any health benefits. If you get hurt at work, you won’t be able to claim it. If somebody reports you, you can be on the hook to pay fines and penalties.
This is one of the only ways to pay no taxes whatsoever, while still making a normal salary.
How to you lower or eliminate the amount of tax you have to pay?