| How many times have you heard someone say, "I | | | | from the government over the years. |
| don't pay any taxes. My accountant takes real good | | | | REASON #3: Charlie is stupid. Again, I'm sorry if I'm |
| care of me...I haven't paid a dime in taxes in years." | | | | being too hard on Charlie. But some people are so |
| Does that outrageous statement sound familiar? | | | | clueless about taxes that if they have no balance due |
| Maybe it's your brother-in-law, or a fellow Soccer | | | | on their return, or if they are getting a refund, they |
| Mom, or a co-worker at the office. And so you think to | | | | mistakenly believe they didn't pay any tax that year. |
| yourself, "What am I doing wrong? How come I'm | | | | And believe it or not, this is actually a very common |
| paying taxes and so-and-so says he/she pays | | | | misconception that thousands of people cling to. Ah, to |
| nothing? How do they do it!" | | | | be so blissfully ignorant! |
| Is it really possible to pay "zero taxes"? | | | | I hope you are not so naive to think that the "bottom |
| For purposes of this article, let's give your "no-tax" | | | | line" on your tax return tells the whole story about your |
| friend or relative a name. Let's call him "Charlie" (or if | | | | tax liability. It doesn't. |
| he is a she, just think "Charlene"). | | | | REASON #4: Charlie is broke. Charlie may actually |
| OK, what is Charlie up to? What's his secret? | | | | pay zero taxes because --are you ready for this one? |
| Charlie has no secret. He's not doing anything that you | | | | -- Charlie doesn't make any money! |
| should be doing. Do not be envious of Charlie, and | | | | Charlie owns a small business or works full-time at his |
| here's why... | | | | self-employment activity, and Charlie may rake in |
| I can think of at least five reasons you should ignore | | | | hundreds of thousands in income from sales of his |
| whatever Charlie says about his "no-tax" situation. | | | | product or service -- but Charlie's business spends |
| REASON #1: Charlie is a liar. Every family has one, so | | | | more than it brings in, and Charlie's business has a loss |
| don't feel bad. Let's face it, some people just like to | | | | every year. |
| indulge in fabrications to make themselves feel good. | | | | So Charlie doesn't really have a tax problem. Instead |
| Charlie is telling you a big fat lie because Charlie has | | | | Charlie has any number of other problems. He has a |
| "issues." 'Nuff said? | | | | marketing problem, or a management problem, or a |
| REASON #2: Charlie is pond scum. OK, hear me out | | | | personnel problem. Charlie's business is failing, and |
| on this one. I don't mean to offend you if Charlie is a | | | | paying zero taxes is just a symptom of a business |
| close and dear relative, or your best friend, but I'm | | | | that will eventually close. |
| going to give it to you straight: Charlie cheats on his tax | | | | REASON #5: Charlie is just scraping by. Charlie's |
| return, and he cheats big time. There are plenty of | | | | business may not be losing money every year, but it's |
| folks out there like Charlie. He's one of the reasons | | | | not really making much either. He has a small profit -- |
| that you and I pay so much in taxes -- he doesn't | | | | enough to keep him busy. His business may even |
| report all his income, and he deducts bogus expenses | | | | "look" profitable, but it's really the classic shoestring |
| by the thousands. | | | | operation. |
| He and his accountant may even be in cahoots on this. | | | | So now, I ask you, do you really want to pay zero |
| Charlie brings in his records and his accountant | | | | taxes? People who don't pay taxes are usually in one |
| crunches the numbers, then calls Charlie and says, | | | | of these five categories: Chronic Liars, Pond Scum, |
| "You owe $5,000." So Charlie rummages around in his | | | | Stupid, Broke, or Just Scraping By. |
| files and somehow managesto come up with another | | | | The purpose of business is to be profitable. The |
| batch of expenses that miraculously reduce his | | | | unavoidable result of a profitable business is taxes. |
| balance due to zero. It's like magic! | | | | And yes, you should do everything legally possible to |
| End result: Charlie's tax return is a big lie. | | | | reduce those taxes. But if you are going to be |
| Charlie is a thief. Charlie should be put in jail for the | | | | successful, you are going to pay some taxes. |
| tens of thousands in taxes he has illegally withheld | | | | When it comes to taxes, stay away from Charlie. |