Ask HN: What are some creative ways to save on income taxes as w2?

2 points·lifeplusplus··5 comments

Obviously max out 401k, have kids, move to state with no income tax, buy a house, etc.

But what else.

Only thing I can think of is start legit business with lot of upfront costs, but not being a CPA, who knows?

I remember leak a year ago where it was revealed how lots of rich people were paying almost no taxes, pro-publica?

I asked my CPA last year what could I do and his suggestion was what you mentioned start a business that racks up losses. The catch is I believe that you have to show that you are making money within 5-yrs. But I'm not an accountant, so get that fact checked by someone who is.

Not a lot of options for W2 income beyond the ones you mentioned.

or, y'know, just pay your taxes...?

or you know use tax incentives govt have provided everyone?

The problem is the incentives the rich can use are not available to everyone. The rich are generally not working W-2 jobs — their income is passive, subject to different tax rules. If you are working a job and getting a W-2 you are almost be definition not rich. The US income tax system is designed to extract money from the working classes. The wealthy can shelter their wealth legally, or illegally and let their lawyers drag things out to a settlement. The rest of us are stuck with having kids, buying houses, and scraping around for deductions.

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