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If taxes were that easy, we wouldn’t need so many accountants in the US. In reality, there are a bunch of ways a person makes $500k and pays less than $150k in
by take_a_breath 6y ago
If taxes were that easy, we wouldn’t need so many accountants in the US. In reality, there are a bunch of ways a person makes $500k and pays less than $150k in taxes.
- For example, if it’s paid as carried interest, they only pay a 20% tax rate.
- They could itemize deductions.
- A farmer could buy a brand new truck and call it a business investment.
- If you’re a pass-through entity you only pay a 20% rate
- newhotelowner 6y ago> A farmer could buy a brand new truck and call it a business investment. That is a business expense. 500k is after all the business (Non-personal) expenses, depreciation and deductions .
- take_a_breath 6y ago$500k is the income. The entire point is that business and personal expenses overlap considerably for farmers so they have wide range for tax purposes. It’s an inefficiency in the tax code which allows a person to have income of $500k and pay less than 31% in taxes.
- WalterBright 6y ago> They could itemize deductions. The AMT (Alternative Minimum Tax) phases out itemized deductions for higher incomes.