Taxes on Startups
Yes, even bootstrapped pre-revenue startups that lose money must pay taxes. You might not be subject to Income Taxes but you will still be subject to other taxes.
Tax Exemptions
Some states exempt certain products from sales tax, but exempting some products from taxes reduces public revenue.
Taxation on Various Income Sources
Inheritances are not usually taxed federally, but subsequent earnings on them are. Public assistance benefits and other government payments are not taxed.
Tax Avoidance and Evasion
The biggest companies use resources to avoid taxes. Tax avoidance is legal, while evasion is illegal. Poor Americans pay lots of taxes, just little federal income tax.
Taxes in Retirement
Taxes are a major expense in retirement, with special rules for Social Security taxation. 38 states won’t tax Social Security benefits at all.
Consequences of Not Filing Taxes
Failure to file taxes may result in IRS summons, penalties, interest charges, and other consequences. Requesting an extension may provide more time.
Reducing Taxable Income
One can reduce taxable income through strategies like the standard deduction. Building wealth involves minimizing expenses, with taxes being a significant expense.
Taxation on Social Security Income
Many states and the federal government tax Social Security income, while certain states only tax it for higher incomes.
Tax Strategies for Expatriates
Establishing residency in tax-free countries and utilizing strategies like the Physical Presence test can reduce US income tax for expatriates.
Items Not Taxed in the US
Some states exempt certain products from sales taxes, while sales of certain food products and sales to the U.S. Government are exempt.
Examples of Untaxed Income
Inheritances, child support, and welfare payments are generally not taxed. Exempt income includes various sources like state and local bond interest.
Issues with Sales Taxes
Manufacturer coupons don’t reduce sales tax owed by the consumer. The tampon tax is considered discriminatory and illegal due to its impact on medically necessary items like tampons.