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> it's shocking and eye-opening how many schemes (aka "legal structures") you can employ to preserve your wealth and reduce taxation which are available to ever

> it's shocking and eye-opening how many schemes (aka "legal structures") you can employ to preserve your wealth and reduce taxation which are available to everyone regardless of their social status. It's just that... most of us mere mortals don't know anything about them. In fact, some of this stuff seems borderline illegal Be careful. There are a lot of creative interpretations of the tax code out there that genuinely are illegal. People who employ them often assume they’re fine because they haven’t been audited or caught yet, but that doesn’t make them legal. Always, always refer to a qualified accountant to review any tax strategies that seem too good to be true. YouTube is a fun place to learn about things, but the goal of YouTube producers is to get more clicks, not necessarily give the most accurate legal advice.

_jal 5y ago
> People who employ them often assume they’re fine because they haven’t been audited or caught yet, but that doesn’t make them legal. There's also the pack effect. Kind of like how few folks taking the EITC actively trade stock, it looks 'normal' for rich people to do these things, whereas the same device when used by someone of more modest means is more likely to attract attention. Not to mention having fewer resources to fight if you are audited.
- SaltyBackendGuy 5y ago
  > Not to mention having fewer resources to fight if you are audited. Can't find the link now, but I read somewhere that the IRS avoids audits if the risk of losing is higher (i.e. the person in question has more resources to fight it $). So their enforcement is heavily skewed towards average people. Which corroborates this statement. > more modest means is more likely to attract attention
  - ASalazarMX 5y ago
    Poor IRS, if only it had some good government contacts, it could ask them to improve the law and close those loopholes. Oh well.
    - deleted 5y ago
      [deleted]
    - mrguyorama 5y ago
      The reason the IRS takes this tactic is it is literally underfunded. It does not have enough money to go after every millionaire and fight those court battles, even though there's a near certainty that it was in the legal right and enforcement of that type would bring back multiple dollars for every dollar spent on enforcement. The IRS does this calculus every single year, submits it as a report to the legislature, and then often has it's budget cut
MattGaiser 5y ago
At least in Canada, it seems that the worst that can happen with a creative interpretation is that you are forced to pay it back.
- PragmaticPulp 5y ago
  In the US you're forced to pay it back with significant additional penalties on top of the back taxes owed.
- soperj 5y ago
  that's only for rich people going using KPMG.
- bawolff 5y ago
  Assuming its a legit misunderstanding and not intentionally malicious, pay it back with interest seems reasonable to me.

_jal 5y ago

> People who employ them often assume they’re fine because they haven’t been audited or caught yet, but that doesn’t make them legal. There's also the pack effect. Kind of like how few folks taking the EITC actively trade stock, it looks 'normal' for rich people to do these things, whereas the same device when used by someone of more modest means is more likely to attract attention. Not to mention having fewer resources to fight if you are audited.

SaltyBackendGuy 5y ago
> Not to mention having fewer resources to fight if you are audited. Can't find the link now, but I read somewhere that the IRS avoids audits if the risk of losing is higher (i.e. the person in question has more resources to fight it $). So their enforcement is heavily skewed towards average people. Which corroborates this statement. > more modest means is more likely to attract attention
- ASalazarMX 5y ago
  Poor IRS, if only it had some good government contacts, it could ask them to improve the law and close those loopholes. Oh well.
  - deleted 5y ago
    [deleted]
  - mrguyorama 5y ago
    The reason the IRS takes this tactic is it is literally underfunded. It does not have enough money to go after every millionaire and fight those court battles, even though there's a near certainty that it was in the legal right and enforcement of that type would bring back multiple dollars for every dollar spent on enforcement. The IRS does this calculus every single year, submits it as a report to the legislature, and then often has it's budget cut

MattGaiser 5y ago

At least in Canada, it seems that the worst that can happen with a creative interpretation is that you are forced to pay it back.

PragmaticPulp 5y ago
In the US you're forced to pay it back with significant additional penalties on top of the back taxes owed.
soperj 5y ago
that's only for rich people going using KPMG.
bawolff 5y ago
Assuming its a legit misunderstanding and not intentionally malicious, pay it back with interest seems reasonable to me.