So What Legitimate Ways Can Someone Be Excluded From Taxes?

[jaydee]

So people don't get steered in the wrong direction, how can they legally be classified as a non-taxpayer?

[Duke2Earl]

The only way you can be a "non-taxpayer" is to not make enough income to be subject to the income tax.

[grixit]

All adult US citizens who have not had their legal competence curtailed, for instance by being put under guardianship, are classified as taxpayers. No one is actually classified as a nontaxpayer. As a taxpayer, you may or may not actually owe taxes in any given year, depending on your income. Those who are not classified, but still have sufficient income, are still liable, but it is their guardian who is responsible for making the payments.

So rule of thumb: be poor or be mentally deficient, and you won't have to worry about income tax.

[wserra]

To briefly amplify on D2E's answer: the IRC defines "taspayer" as simply "any person subject to any internal revenue tax". 26 USC 7701(a)(14). So any U.S. citizen, or non-U.S. citizen who has income from U.S. sources, is a "taxpayer" so long as his/her income is above the threshold. Lots of tax questions don't have easy answers, but this one does.

[Quixote]

There is no way to be "excluded from taxes". A person's tax liability is determined by his income, deductions and credits, not by some attribute of the person himself. In common usage, some groups of people are said to be exempt from the income tax, but that means only that they tend to have no taxable income. For example, in general, non-resident aliens are not liable for US income tax. But that is so because, in general, they have no taxable income, not because they are non-resident aliens. A non-resident alien with taxable income is not exempt.

The term "non-taxpayer" was used by one court, in one opinion, to refer to someone who did not owe the specific tax liability at issue in the case. Tax deniers tend to cite that questionable usafe out of context. In English, the term means someone who does not pay taxes. It has no legal signicance whatsoever.

[webhick]

So people don't get steered in the wrong direction, how can they legally be classified as a non-taxpayer?

Someone around here has a signature alluding to the answer. The only sure-fire way to legally be classified as a non-taxpayer is to die. Like...permanently.

[Judge Roy Bean]

So people don't get steered in the wrong direction, how can they legally be classified as a non-taxpayer?

You've actually asked two different questions, one of which has been answered (quite thoroughly).

There are probably dozens of legitimate ways someone can be excluded from owing and thus paying taxes. If you have no income, say, you're unemployed, not receiving some kinds of taxable benefits and you're living off of cash and liquid assets (i.e., savings) you've already paid the taxes on, you don't owe any taxes. If your income comes from non-taxable investments (certain types of bonds for example), you don't pay taxes on those.

And if you want to know more about tax shelters . . . well, you'll have to pay for decent advice.

[ASITStands]

There is no way to be "excluded from taxes".

Generally, I agree with that statement.

However, there are definitely Items Specifically Excluded From Gross Income. Start there.

When I read the above statement, I thought of people I know whose sole source of income comes from their investments in municipal bonds or tax-free governments. Those are not always excluded from taxation altogether but often result in little or no tax liability.

Otherwise, there's no such thing as a "nontaxpayer" but only those who don't pay taxes. That might be because they have no liability, or it might be because they refuse to comply.

It's a misconception of law to think there's a way to be a "nontaxpayer."

[RyanMcC]

There is also the option of the "Foreign Earned Income Exclusion" if you don't have the funds to live off the profits from tax-free bonds.

http://www.irs.gov/faqs/faq13-3.html

In essence, if you live in another country and earn your living there, up to $87,500 of your income would be excluded from federal income taxes. You must be physically present in the foreign country 330 days of a 12 month period. You would naturally be subject to any taxes the foreign country imposes, but many do not have an income tax.

[Evil Squirrel Overlord]

Benjamin Franklin coined the phrase: "'In this world nothing can be said to be certain, except death and taxes."

It is true. There is only one true non-taxpayer, and they are to be feared...

http://www.youtube.com/watch?v=tWaKcvuh1os

[The Operative]

So people don't get steered in the wrong direction, how can they legally be classified as a non-taxpayer?

Someone around here has a signature alluding to the answer. The only sure-fire way to legally be classified as a non-taxpayer is to die. Like...permanently.

That was my old sig line. A question on Yahoo!Answers asked, "Is there a form to fill out to stop paying taxes?"
Answer: "Yes, it is called a death certificate and someone fills it out for you."

[jaydee]

I play poker at Foxwoods and have been averaging winnings of about 90-100 thousand dollars a year, the past ten years. I always walk out with cash because you don't have to report anything under $10,000. If I have more than $10,000 in chips, I just cash out two smaller amounts at different parts of the casino.

I don't file or pay any taxes because I don't claim to be a U.S. citizen and no one can show that I am. I keep all my assets in private trusts and deal only in cash.

So it has been my experience, that if you aren't a U.S. citizen, they have no political jurisdiction to claim any taxes from you.

[.]

So it has been my experience, as an outright tax cheat and evader that one may get away with it for a number of years. Then again, I might just be a troll.

Fixed it for you.

[LOBO]

I play poker at Foxwoods and have been averaging winnings of about 90-100 thousand dollars a year, the past ten years. I always walk out with cash because you don't have to report anything under $10,000. If I have more than $10,000 in chips, I just cash out two smaller amounts at different parts of the casino.

Someone gave you bad information. From the IRS website...

Reportable Gambling Winnings
Generally, gambling winnings are reportable if the amount paid reduced, at the option of the payer, by the wager is (a) $600 or more and (b) at least 300 times the amount of the wager. However, these requirements do not apply to winnings from bingo, keno, and slot machines. Gambling winnings for these games are reportable if:

The winnings (reduced by the wager) are $1,500 or more from a keno game,

The winnings (not reduced by the wager) are $1,200 or more from a bingo game or slot machine, or

The winnings (reduced by the wager or buy-in) are more than $5,000 from a poker tournament.

If you pay reportable gambling winnings, you must file Form W-2G with the IRS and provide a statement to the winner (Copies B and C of Form W-2G).

These are just the legal requirements fro reporting winnings. Individual casinos can issue statements for less. I glanced at the Foxwoods website, and it issues a 1042-S for payouts over $300.00 for players from foreign counties. Whether or not it is reportable, gambling income is still taxable. See below.

I don't file or pay any taxes because I don't claim to be a U.S. citizen and no one can show that I am.

It wouldn't matter...From the IRS website:

Taxation of Resident Aliens:

A resident alien's income is generally subject to tax in the same manner as a U.S. citizen. If you are a resident alien, you must report all interest, dividends, wages, or other compensation for services, income from rental property or royalties, and other types of income on your U.S. tax return. You must report these amounts whether from sources within or outside the United States.

Taxation of Nonresident Aliens:

If you are any of the following, you must file a return:
- A nonresident alien individual engaged or considered to be engaged in a trade or business in the United States during the year.

- A nonresident alien individual not engaged in a trade or business in the United States with U.S. income on which the tax liability was not satisfied by the withholding of tax at the source.

I keep all my assets in private trusts and deal only in cash.

So basically, you are hiding our income. Not good if caught and tried for tax evasion. And it's easier to catch when you use a trust and/or use cash only than you think, especially if you make $100,000.00 a year.

So it has been my experience, that if you aren't a U.S. citizen, they have no political jurisdiction to claim any taxes from you.

If there wasn't any jurisdiction to claim taxes from you, then why do you need to use a private trust and deal in cash? There went that cheek defense.

Hopefully, if it becomes necessary, you at least have records of your losses so you can use them as a deduction.

[wserra]

I play poker at Foxwoods and have been averaging winnings of about 90-100 thousand dollars a year, the past ten years.

Well, congratulations. I'm sure you'd be interested to know that my aunt Tillie grows prize-winning tomatoes in her garden in the Sea of Tranquillity.

I always walk out with cash because you don't have to report anything under $10,000. If I have more than $10,000 in chips, I just cash out two smaller amounts at different parts of the casino.

Were this true, you'd be well advised to check out something called "structuring". Since it's not, you don't have to worry.

I don't file or pay any taxes because I don't claim to be a U.S. citizen and no one can show that I am.

Well, I don't pay any taxes because every morning I face Fort Knox, bow three times and recite the Magna Carta.

I keep all my assets in private trusts and deal only in cash.

Why bother? I mean, since you're obviously not liable for taxes and all.

So it has been my experience, that if you aren't a U.S. citizen, they have no political jurisdiction to claim any taxes from you.

Your "experience" plus a carton of smokes to Bubba will get you one day a week at the commissary.

[Doktor Avalanche]

The kool-aid is getting mighty deep in here.

[Nikki]

So people don't get steered in the wrong direction, how can they legally be classified as a non-taxpayer?

Everyone is misinterpreting the question. There are many people who have been legally classified as non-taxpayers. Examples include Schiff, Snipes, Rose, ...

[Doktor Avalanche]

So people don't get steered in the wrong direction, how can they legally be classified as a non-taxpayer?

Everyone is misinterpreting the question. There are many people who have been legally classified as non-taxpayers. Examples include Schiff, Snipes, Rose, ...

ROTFLMAO!

I really, really liked that keyboard, Nikki.

[Kimokeo]

The original question involved taxes. Since there was no definitive statement that 'income taxes' was meant, then you do pay taxes.

Perhaps you don't pay your income tax. There's a tax on gas. Do you buy gas for your car?
Does your merchant charge sales tax on anything you buy?

By the time your done, you will probably pay some tax along the way.

Tax evasion can be very taxing.

[Prof]

Does anyone here really believe the following statement?

I play poker at Foxwoods and have been averaging winnings of about 90-100 thousand dollars a year, the past ten years. I always walk out with cash because you don't have to report anything under $10,000. If I have more than $10,000 in chips, I just cash out two smaller amounts at different parts of the casino.

What lives under a bridge and has a name which rymes with "droll?"