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How to skip taxes on extra income?

Discussion in 'Business & Tax Advice' started by CashJunkie, Jul 28, 2011.

  1. CashJunkie

    CashJunkie Newbie

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    I'm going into the BH bizz and have a few questions about taxes for my earnings..

    First of all I already pay over $1700 tax each month on my 9to5 job so I don't feel bad about trying to skip taxes on my (to start with) small extra income. My full time job should also be enough to keep the "tax hunters" away..

    My first idea was to only work with CPA networks and such that pay to PayPal and then buy a new computer and other stuff directly from PayPal. That way the cash never touches my actuall bank account.. Would that work?

    Anyone got any helpful input? If I start to earn more I recon I have to find some other method.. Or buy alot of computers :p

    Im based in Sweden so any general or Sweden specific help is appreciated!
     
  2. katona44

    katona44 Jr. VIP Jr. VIP Premium Member

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    where are you from?
     
  3. kirkonpolttaja

    kirkonpolttaja Senior Member

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    Hey there! i'm your neighbour from finland, in my IMHO this works :)

    For those who is coming to flame, if income is small, you dont have to declare it... well you have to but if the income is like ~100€/month, it's not that big of a deal for even the tax hunters.

    This month i earned something like 400€ from IM and got all into my paypal, and i just reinvested that money right away for IM tools. I dont know about other countries but here you can use money that is supposed to go to taxes to help your business by buying related tools, for IM you can pay your internet bill, electricity and hardware with money that would go to taxes otherwise.
     
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  4. kirkonpolttaja

    kirkonpolttaja Senior Member

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    lol... check out the OP's last line
     
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  5. CashJunkie

    CashJunkie Newbie

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    Sweden

    Thanks for your reply!
    That was pretty much what I was thinking.. But what woulld you do if you started earning alot more? To be honest, that's the aim for all of us. Would you go legit and just pay your taxes?
     
  6. e13a34d32

    e13a34d32 Registered Member

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    Yea you would go legit and pay your taxes. If you get caught and the, "tax hunters" question you on why you didn't report previous income then you can just play it off as ignorance of the tax laws.

    Also good luck in Sweden. World's highest taxed country in the world. You are better off just living off welfare.

    If you really want to avoid taxes then you have to have a business that ISN'T OWNED BY YOU. The income you earn is deposited into that foreign bank account (not in your name) and the income is reported on the other person's return and they pay the taxes which will probably be lower than sweden's tax rates. Once the income has been reported and taxed then the trick is actually getting that money into your hands so you can spend it.

    This method works great if you are reinvesting most of your profits back into the business. If the business is located in a tax haven then you will pay 0% tax.

    None the less, this is a very tricky method as the other person has to be very honest.
     
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    Last edited: Jul 29, 2011
  7. Jii^2

    Jii^2 Registered Member

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    At least in Finland it's easy enough to start up a small company. This way you can do just like kirkonpolttaja said and write off things as expenses in order to reduce the total profit shown.

    I'm a Finn myself too - and as I work from home, I can mark a small percentage of my rent as an expense. Anything that is bought for the business can be written off as an expense. I know a HUGE BUNCH of people that even mark bar nights / restaurant visits as expenses... I don't have the balls (nor the will) to do that. But it's possible.

    And I'm making some 2-6k€ a month from IM, depending on the month and various other things :) And I'd rather tell the tax officials all than live in constant fear of breaking the law :) (tax laws both here and in Sweden are STRICT, I advice you to play by the rules to avoid all conflict)
     
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    Last edited: Jul 29, 2011
  8. kirkonpolttaja

    kirkonpolttaja Senior Member

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    Eventough i'm investing all money back to IM, i write all tranfers into excel sheet if hunter appears to ask some questions so that i have something to show to them, mainly to show that i have not made any profit cause all has been re-invested into company.

    When business grows too much (+500€/month) then it would be smart to turn for accountant that can do your taxes for you... think they dont cost that much? my friend is studying for accounting so maybe i'm going to use his skills and pay him with boooze.

    Taxing in Finland SUCKS!!...

    Jii^2, paljon on muuten veroprosentti IM'ssä? mulla on joku mielikuva että ois jotain 7% kuten käsitöiden myynnissä (taide/kulttuuriala).
     
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  9. Jii^2

    Jii^2 Registered Member

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    I'm a Business major so I actually do all accounting myself :) Just keep all the invoices and have your books updated all the time (Excel is enough for a small company if you can prove that your calculations are correct). Although using an accountant can be written off as an expense too! :)

    PMed you about this one! Dunno if speaking Finnish is allowed here ;)
     
  10. CashJunkie

    CashJunkie Newbie

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    Thanks for the responses!

    I'll go with my PayPal method while learning BH and if/when it takes off I'll pay tax on it :)
    The only laws that are strict in Sweden is the money ones, like not paying tax.
    Get the same time in jail for not paying tax on $3 as for raping someone :eek: