a legal tax loop hole

Discussion in 'Financial Cents' started by tacmotusn, Nov 18, 2010.

  1. tacmotusn

    tacmotusn RIP 1/13/21

    I hesitate to widely broadcast an obvious legal loop hole for fear it will be closed as a result. However, the way things are today every dollar is important and who knows how long this will still be applicable.
    I have a rather large property tax bill for two properties that totals about $2500 annually. As a retiree, my tax bill is rather simple and I don't often have a lot of other entries upon a 1040 long form so I usually only claim the standard deduction.
    However, I had this idea pop into my head and did a little research and believe some others could also take advantage of it like I am every two years.
    If all your deductions on a 1040 seldom rise above the amount of the standard deduction, or hover slightly above or below that amount here is the loop hole, as follows:
    if you have a local property tax bill the size of mine or larger, examine what would happen if you didn't include it in your figures for long form total deductions. Would it drop you well below the standard deduction, or for that matter below it at all? If it does this will work for you.
    Since the dedection on the 1040 long form is for the local property taxes paid in a given tax year (1 jan - 31 dec of the same year), what you do is this.... in two consecutive years pay the local property taxes in the same year. ???? I can see the questions firing from your brain! Let me explain further. Its really simple. My property tax bill normally arrives in November, just like it did this year. I normally pay it right away for a slight monetary decrease over waiting until just before it goes deliquent in the new year to pay it. This year I will pay my property taxes on or after 1 Jan. of next year. When I fill out my 2010 federal taxes I will take the standard deduction. When my local property tax bill arrives next year, I will pay it before 31 Dec 2011. When I do my federal taxes for 2011 prior to 15 April 2012 I will fully legally claim 2 years worth of local property taxes, because they were actually paid in 2011. This will take my deductions on the 1040 long form well above the amount of the standard deduction. I will thus lower my taxable income significantly for that tax year. Simple, legal, and easy!!!
    every two years the same thing. one year standard deduction and no actual property taxes paid in that tax year. next year 1040 long form deductions and 2 years actual property taxes paid, and a significant savings.
    YMMV, check it out. good luck. JMHO
  2. Brokor

    Brokor Live Free or Cry Moderator Site Supporter+++ Founding Member

    Or, don't pay taxes and shovel "rent" to the state for property you are supposed to own.

    "But, isn't that why those military agents killed them there people in Waco and up in Ruby Ridge?"

    NO, that's not why. Those people were...you know what? Maybe you should pay your taxes.
  3. SLugomist

    SLugomist Monkey++

    When did property tax start in the US?
  4. Tracy

    Tracy Insatiably Curious Moderator Founding Member

    Taxes began with the Pilgrims.
  5. tacmotusn

    tacmotusn RIP 1/13/21

  6. Falcon15

    Falcon15 Falco Peregrinus

  7. lynnie

    lynnie Monkey+

    Thanks. Our property taxes are going up 80 a month in 2011, almost a thousand a year. This is thanks to our home being reassessed at the top of the market, even though it is back down to what we paid in '01.
  8. dragonfly

    dragonfly Monkey+++

    My property taxes have incresed 4 fold in 2 years on 3 lots of measley 2.2 acres each!
  9. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    Create a trust and hold you land in the trust. Also set up a company hay you can bring income into. Pit that company in the trust. Have the trust pay taxes and let the company pay for you preps out of income. After all, you are a company and if you didn't work you company would no make any income. Gross up your income with a company and get paid as a 1099 employee. I bet you could write off many expenses for the company....especially security and ammunition as you company might be a security consulting co.......just food for thought
  10. epd160

    epd160 Monkey+

    In COMMUNIST CHINA (if you are wealthy enough to purchase land in the first place), you pay property taxes ONCE--when you buy the land. And then nothing else ever again. (of course there are lots of other downsides to living under communism).
    Even they don't charge rent on property you're supposed to already own.
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