Large jump in income

**CeciliaH** · 07-29-2006, 08:20 AM

So - Thanks to a certain someone - I've gotten into something that may make me a heck of a lot of money really **** fast.

Which is awesome.

But the payouts are sent via wire - so first off I have to decide what bank account to deposit into.

Next - when you have so much cash coming in - with no expenses to "officially" get it down through write offs..how do you minimize the amount of taxes to pay?

Since its deposited into a bank account I assume there's no way to hide the amount - whether its my business account or my personal - they'll both show up to the tax guy right?

btw - i'm in Canada.

I'm worried actually that they'll put me on the terrorist watch list for getting large sums of money without them being able to see how I'm getting it.

I wanna do this right from the get go.
Ideas?

**Tran** · 07-30-2006, 12:11 AM

Well, here in Utah and I bet probably everywhere else.. As a self-employed person you are liable for 40% of whatever you make..

**networkmom** · 07-30-2006, 07:24 AM

Hmm, I would like to kwow what you are doing

no seriously you will need to pay taxes on the money since it is going in your account.

Denise

**sames1** · 07-31-2006, 10:38 PM

Quote:

Originally Posted by Tran

Well, here in Utah and I bet probably everywhere else.. As a self-employed person you are liable for 40% of whatever you make..

Hey.. I'm in Provo.. where are you? :tooth:

**Jawie** · 02-21-2007, 04:38 PM

Well the best way is to withdraw a certain amount ; then start a small business then make a good plan to make a good return on your capital. At even though you are paying taxes, still you can recover more than that amount if you`ll be lucky enough in improving your business.

Then I think there are some investments that less taxes applied. Just refer to a professional expert on this.

Good luck for your money making.

**jacob** · 02-21-2007, 05:48 PM

I would put at least 30% of it aside for taxes. You don't have to wait for when its tax time to actually pay income taxes which is something I wish I knew before I'd spent the 30% I had put aside for taxes for 2004, but anyways...

You might have more write offs then you think. Contact an Accountant - i've been lucky in having two closer friends who are CA's for KPMG. what i've written off in the past on my taxes here in canada: interest from student loans, tuition, transportation/gas, cell/phone, internet, hydro, varying business expenses: office supplies, equipment, hosting, domain reg, etc. and of course, we can now write off transit! If you are not incorporated, your taxes for your business and yourself are considered the same.

**GeorgeB** · 02-21-2007, 08:59 PM

You cannot hide how much you made no matter what type of account you have or what you do with it.

Your employer, in this case whatever ad network or CPA network you are with, is the one that reports your earnings to the IRS. If you report anything other than what they say you made you will be audited.

**evilknny9** · 02-22-2007, 08:27 AM

Well i'm not completely familiar with how Canada works or anything, but if your goal is to MINIMIZE the amount of taxes that you want to pay (like you stated) then the only thing I can really think of is to try and write as much as possible off as business expense. My recommendation (provided you have the proof (receipts)) is

Domain? business expense
Hosting? business expense
Computer? business expense
Internet? business expense
Advertising? business expense

etc. etc. Here in the US though you have to be really careful, and example...a friend of mine tried to write gas for his car off as a business expense (his business actually had a physical presence) and they are REALLY anal about that...they actually require you to use a fuel monitor so that it's ONLY the gas that brought you TO work...yeah that's how serious they are. Anyway good luck writing off as much as you can as business expenses, and lets hope the IRS equivalent in Canada doesn't come after you

.

**aLpHaSuRf** · 03-09-2007, 10:17 AM

Sorry I misread your post. HSBC is a bank that has a very good reputation. You might be able to set up an offshore bank account with them. You can look into it more. I am not sure if it would work for you but might be worth looking into.

**imported_chopper** · 03-09-2007, 06:49 PM

There are a few things you can do to help your tax situation in Canada.

Make your maximum RRSP contribution every year. That right there lowers your taxable income and provides money for the future.

Get loans for investments. If you're going to make that kind of cash, you'll be able to always pay the payment. The interest you pay on those loans lowers your taxable income and gives you investment money to look forward too.

There is also something you can do with your mortgage (if you have one) I think it's called The Smith Maneuver. Basically turns your bad debt (mortgage) into good debt (investments). The interest paid again lowers your taxable income.

Keep your receipts for office purchase (pens, paper, etc)... don't forget to use a part of your house as an expense (electricity, rent, heat, mortgage interest). If you use your vehicle for anything related to what you do (office supply shopping, etc) keep a log. A portion of the gas, car washes, maintenance, interest paid for car loan, etc all help.

Capital gains (buy a new computer, printer, whatever and write off the capital gain portion for as long as you're in business) help.

Entertainment related to your business (meals, etc).

All those little things REALLY add up quickly and only help your business in the end. There are many ways you can lower your taxable income, even if it is large.

Hope this helps some.

**mostwanted** · 10-05-2007, 10:25 PM

I had a real large jump in income last year... year before last I made 0, then last year I made about $495,000! Yea I would say that was a jump... Save all your receipts! GAS! Hosting, script work done on site or sites, whatever... If you have a large profit, you will not get flagged or audited... Now if you have a very low profit compared to your total then maybe they might look into things... I had a large profit since I don't have to much to write off.. One thing you can do is so a lot of advertising! Get it larger than what it is.. If you have the money spend it!! Make more!!

**xboxundone** · 10-09-2007, 06:26 PM

i dunno the laws in CA. But I count it a blessing when i have to write the huge tax checks cause it means i am making a ton also... while i hate paying it I know that i am making much more. I would consult a local CPA or attorney/financial planner as there are ways you could save for retirement etc.. that would defer taxes.

**imported_john2k** · 10-21-2007, 04:51 PM

Quote:

Originally Posted by CeciliaH

Next - when you have so much cash coming in - with no expenses to "officially" get it down through write offs..how do you minimize the amount of taxes to pay?

Well, one thing to always keep in mind - expenses do not lower your taxes, they lower your taxable income. It's a big misconception that finding ways to spend money will prevent all that money from going to the IRS (or Canadian equivalent).

For example, if at the end of a year your tax liability is $20,000 - if you spent $5,000 more on advertising that doesn't mean your tax liability would then have been $15,000. Your tax liability would have been $20,000 - ($5,000 * your tax rate). So given a tax rate of 20%, spending $5,000 more in legit business expenses would lower your tax liability to approximately $19,000.

Quote:

Originally Posted by CeciliaH

Since its deposited into a bank account I assume there's no way to hide the amount - whether its my business account or my personal - they'll both show up to the tax guy right?

Probably, but not always. Depending on what your bank reports and what the company paying you reports. Why hide it anyhow? Just pay the taxes that you are required to pay and you'll have nothing to worry about (although you'll have a bit less money...).

Quote:

Originally Posted by CeciliaH

I'm worried actually that they'll put me on the terrorist watch list for getting large sums of money without them being able to see how I'm getting it.

Well, just make sure if you are ever questioned about it you can easily show the source of the money or how you are earning it.

**imported_gayan** · 03-02-2008, 03:19 AM

Hey Guy, what is this program. I am from asian country. can i join with it. What is "wire" payout?

**Lpspider** · 04-11-2008, 01:57 AM

Quote:

Originally Posted by imported_gayan

Hey Guy, what is this program. I am from asian country. can i join with it. What is "wire" payout?

I don't think they were talking about a specific program to make money.

A wire payout is a wire transfer of money between banks.

**BamaStangGuy** · 04-11-2008, 02:01 AM

Right now I am putting 30% of everything I make in a tax account and not touching it. I also pay quarterly estimated taxes. It's depressing how much money the US takes from me and the crap they blow it on.

They want to talk about recessions and why we are pretty much in one, if I didn't have to pay income tax, which is ridiculous and unconstitutional to begin with, I'd be putting that money into the economy. I could do a lot with 1300 extra dollars a month...

**VirtuosiMedia** · 04-11-2008, 02:58 PM

Check into incorporation. If you own a corporation, you can pay yourself through dividends from shares instead of a salary. Salary is generally taxable anywhere around 35-45% depending on where you live, but dividends are taxed at about half that. You'll have to do research to make sure you get everything right, but if you've ever heard about how the rich are taxed at a lower percentage rate, this is one of the ways they do it, by owning corporations.

**colatax.com** · 04-17-2008, 10:26 AM

As long as you can show documents and prove your source of income you will be fine. Oh and pay our taxes! A way in the US and probably CA to lower your tax liability is by spending some money on the business. Expenses such as business car, utilities, mortgage/lease, ect. Also when you buy new equipment computer, printers, fax, chairs, ect. Make sure to set up depreciation accounts.

Talk to a tax professional in your country they should get you on the right track when it comes to lowering your tax liability.

**NaughtyGirl** · 04-19-2008, 02:07 PM

I'd honestly say that you need to talk to a tax specialist in your area. Laws change year after year, and you really need to hire someone specifically to help you with this. What they save you in taxes will be worth their fee.

Good luck!