Tax avoidance strategies

Philip J. Fry

Philip J. Fry

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What are some tax avoidance strategies that you know? This is not evasion. You are paying your taxes. Just the right amount determined by the law.
  1. Live outside the US for 330 days a year to be exempt on federal taxes up to about 120,000 USD in income a year.
  2. Start a solo 401k to put up to about 60,000 USD a year into retirement.
  3. Have a luxury car blog or YouTube channel and have your company buy a luxury car. It is now a business expense and is purchased with pre tax money.
  4. buy all office shit with business money which includes all electronics and equipment. Again all pre tax money. Basically is 30% off or so.
Have a home office and hire a cleaning lady for your home. Business expense. I know a guy that does this.


I’m looking to see if my company can buy a house and I live in it as a perk of employment. Would be awesome. Anyone know?

If you’re lost, the disadvantage with income is that it is taxed. So it is better to max out your income at a good amount and then have the company cover the lifestyle expenses for you. This way your consumption is paid by income and housing and car and anything else is paid with pre tax dollars which makes it all at a discount.
 
Self insure through a captive insurance company that you own/setup somewhere like the Bahamas. It's not tax avoidance but it's a tax deferral as the policy payments are aggregated in the captive insurer, offshore, and will only be taxed on repatriation. It's complex arrangement, and has to be a real setup and market rates for policies, but if you are earning enough it can be quite a lucrative tax shelter.
 
Honestly, invest in an awesome accountant, and/or tax attorney if you can. Those guys are worth their weight in gold and the good ones will know every single tactic/strategy/loophole and the details to consider for each. And it'll be their job to keep up to date on all these things and recommend the necessary changes. Can't recommend this enough.
 
A lot of the complex structuring stuff is much more expensive these days as you really need a physical office and key staff for it to be legit. CFC/management and control laws are strong in most countries these days.

Best 'hack' is to get personal residency in a low tax country and use your income exclusion. Anything above 120k, try to write off on the company as expenses. Simple and effective.

Many Americans I know in low tax countries are also married to a foreigner. The foreign wife earns a disproportionate percentage of income as they don't have the same 120k limit.

Not all tax havens are made alike. And not all low tax opportunities are in tax havens. If it's a path someone wants to go down, it's worth them travelling the world for a year or two working out where to domicile themselves.
 
It really depends from country to country, you have a lot of loopholes and schemes in America which is what people need good accountants for.

In Europe for most countries it's quite simple - there are expenses you can write off, and there are expenses that you can't write off. Things like paying for a part of your office from your company's money or when & how you're allowed to use a company car are all regulated in detail. Eating out, etc. An invoice is needed for everything.

I've fucked around with this a little bit before, but then I realized that my native jurisdiction is not all that bad and decided to stick with it. For reference, it's much better than the U.S., not as cheap as Romanian/Bulgarian/Georgian/Serbian low-budget low-tax options are, but a million times more convenient than those.

Some countries also have 0% tax on undistributed profits for companies, meaning that as long as your money stays in the company it's not taxed. It's only taxed when you take it as dividends or salary. Many use an Estonian company for this. The money is tax-free as long as it's in the company.

For paying out, you could get creative. Haven't heard of anyone doing this, but for example, income tax is 0% in U.A.E. so if you move your personal tax residency there and pay yourself a salary from the Estonian company - in theory, that could work, and you'd get your money out tax-free. Wouldn't do this without getting some hardcore legal counsel first though.

BTW - if you're running your U.S. LLC while living full-time in Germany, in theory, it should become liable to pay German taxes according to "permanent establishment" rules. That's because the permanent seat of the company has been moved to Germany. Most likely they won't check this, but it's something to be aware of.
 
Some good ones here!

I have another one from my real estate agent. I was looking at a €255,000 apartment (with VAT already included) and had the cash in my LLCs bank account. I didn't want to pay myself €255,000 though as I'll probably owe €100,000 on taxes on it making the whole purchase €355,000 or so. Then my real estate agent, who also owns a business and is rich, suggested I just have the LLC give me a loan for 30 years at 3% or so for €255,000. That would be debt and not taxable. It'll also inflate the cost of the apartment away over the years, especially if inflation is 10% or so :smile: so I did :smile: Best real estate agent ever!

Of course I now pay €1,600 or so a month for my apartment from my income but, hey, that's from my regular income!
 
I have a 80 page pdf about tax saving strategies... most of it should still be relevant but FYI it is from 2019? but it should give you an idea of loopholes and etc.

Don't quite remember where I got it from though.

[dead link]
 
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As someone that has done a lot of this, much is going to depend on:

1. Your tax status ( c-corp, s-corp, disregarded, sole prop, partnership, etc )

2. Your income

Some things mentioned in this thread make no sense or are not possible unless you fit into a certain income or tax status.

Don't blindly implement several of the things mentioned above without knowing the implications of each on your tax status and income level and what you actually gain from it ( or not gain ).
 
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