10 Tax Deferral Strategies of the Rich


How the Wealthy Avoid Taxes

For the vast majority of people, there never seems to be enough money. From paying off student loans to affording a place to live, and eat, money can be tight. For very few however, having money and keeping it is not a problem. These super rich individuals have an incredible number of loop-holes they use to keep their money from being taxed. While the majority of people pay full taxes, these super rich get away with astonishingly low taxes. How do they do it? Lets find out.

1. What Everyone Thinks

When it comes to ways of hiding money, everyone first thinks about sending it overseas. These so called “tax havens” allow individuals to hide away wealth. Popular tax havens include the Cayman Islands, where more then 85,000 American companies and individuals are registered.

2. Shell Companies

So what exactly is a shell company? Simply put, it is a way for very rich people to hide money from the government. A shell company is one that only exists on paper. It legally exists, but provides few if any services to people. Instead, it is used to buy and sell things to avoid taxes on the various profits earned.

3. Becoming a Corporation

Being in a higher income bracket, the super rich has less tax advantages then the average individual. On the other hand, they have the means to create their own corporation. Known as a personal brand corporation, these kinds of corporations allow the super rich to channel their wages through a corporation, claim expenses, pay interest free wages, and reduce income taxes.

4. Your Second Home

Having multiple homes or expensive status symbols can often aid the super rich in reducing their taxes. This brings us to the term, “Second Home.” All a super rich person has to do in order to clam the tax credits from a second home is to live there for at least 2 weeks. In addition, the home does not even have to be bought. Rather, it can be rented instead.

5. Trust Fund

Trust funds are ways for individuals to transfer valuable assets without the federal estate tax taking any. This is why many super rich trade their common stock for preferred stock, there by reducing the large amount of federal estate tax owed. The end result is that they get out of paying a significant amount to the government.