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Comment by shados | Hacker News Reader

the US is in a weird position where the federal government actually has very little power. But it has tax power. So they just use taxes as a way to manipulate things in the way they want.

But as far as I understand, the US tax system is also one of the 2-3 most complicated in the world... Being an permanent resident and not being used to this from my home country, Im making a lot of suboptimal financial decisions purely to avoid complicating my taxes... eg: I avoid consulting like plague, even when I have a worthwhile opportunity to do so.

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The cost of a CPA is many orders of magnitude less than whatever "suboptimal financial decisions" you are making. Not consulting to make your taxes easier is borderline idiotic at standard 1099 developer rates. Two or three hours in a year pays for the CPA and all the overhead.

I actually don't believe the federal government has very little power. The Supremacy Calause, the Civil War, erosions of the 10th amendment (the US code is intense!), having a court called the "Supreme" court, regulating interstate commerce, adjudicating disputes between states, raising an army, and of course taxing citizens in any state should provide ample support to the federal government's power. And yes, they also control individual states by proxy using fund distributions as a carrot (road standards, national speed limit). They control immigration into the US; no individual state has the power to invite a foreign citizen into a US state.

I wouldn't avoid opportunities because of the complexity of the tax system. Ask around for good accountants, they won't be as expensive as you think. Consider paying an accountant as a necessary cost of doing business.

Odd because the complications create the opportunities

I pursue certain characterizations of income

Ie. If I know my employer withheld too much social security tax then I'll consult because no money is withheld and not worry about paying taxes on it because it will balance out

Or I'll pursue a compensation structure that can be characterized as capital gains instead of self employment income

And more

You could find an accountant to do your taxes. It would probably cost much less than you'd make consulting, and sometimes they can find ways to save you more money than you paid.

That's right. I always use an accountant who is a family friend. She charges about $200-$300 but manages to usually get back multiple magnitudes of that back. Plus she's always there to answer any questions about what options I have and what should be my best strategy.

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