How To Legally Pay *NO* Income Tax

by Mr. Cheap

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Every year around tax time people get grumpy about shelling out cash to support the government. It always depresses me when people want more and more services out of the government, but don’t connect these services with their high tax bills (I like to call these people “Canadians”). Luckily there’s an easy method to reduce your income tax bill to nothing.

If you thinking about buying tax preparation software then consider software programs such as TurboTax or TurboTax Canada (formerly QuickTax).

Before getting into the how, a consideration is should you do this. Taxes pay for communal services such as hospitals, roads and schools that people are quite happy to take advantage of (and often happy to pay for). In the movie “Stranger than Fiction” Will Farrell plays an IRS auditor who is investigating Maggie Gyllenhaal because she deducts the money that would have gone to the military from her tax payment. Unfortunately we don’t have √† la carte taxation, you pay your share of EVERYTHING or you go to jail.

Tax protesters are kooks who mistakenly believe they’ve found a legal loop-hole to avoid paying taxes, withhold paying taxes, then get thrown in jail. I definitely don’t recommend anything along those lines. Wesley Snipes got himself into trouble by falling in with some of these characters.¬† Luckily he’s half-vampire, so no one will mess with him in jail.

So, to get back to the title of this post, the easy way to pay no provincial or federal income taxes is just to earn less money than the minimum which is taxed in your country. In Canada, this would be about $9,850 (for someone living in Ontario according to Taxtips.ca), or $820 / month. Certainly you won’t be living like a king, but I think it’d be possible to live on this. You’ll have to calculate the maximum earnings for countries outside of Canada, but it’ll probably be a similar amount.

One man who’s living this lifestyle is Don Schrader. He felt strongly enough about not wanting to finance military conflict, that he has restricted his earning below an amount which would cause him to pay federal income tax (and lives the lifestyle this allows). He also drinks urine, so he might not be the ideal role model, but he does prove it’s possible.

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{ 32 comments… read them below or add one }

1 MoneyGrubbingLawyer

You know, when compared with drinking urine or having to face half-vampires in jail, paying taxes doesn’t look so bad…

2 Traciatim

Pop out a kid, it drastically increases your tax-free income. You could probably make 25K before paying taxes if you include the GST rebate, CCTB, UUCB, Child Credit, and Equivalent to spouse credit.

I know, I’m insensitive . . . it comes with the heart of ice of being a Dad :)

3 Potato

Scholarship income and tuition credits also give you more tax-free headroom.

4 Mr. Cheap

MGL: Very true!

Traciatium: Hmm… that’s an idea. Could I get the kid to drink urine or make him a half vampire?

Potato: Yes, this is true. Or you could make more and shelter it in an RRSP, or you could make more from dividend income… Lots of options.

5 Jordan

Mmmm… nothing like a hot steaming cup of urine you wake you up in the morning, maybe that’s the life style for me.

6 Kyle

I’m no scientist, but I’m fairly certain drinking urine after it’s been through your body more than a time or two is extremely poisonous. Probably not the brighest of ideas.

7 Mr. Cheap

Kyle: I actually discussed this with a buddy in med-school who’s grandfather drinks his own urine first thing in the morning (apparently it’s a Chinese thing).

As long as you didn’t drink ALL the urine your body produced, your system would just pass the waste products through a second time (and your urine would be a little more concentrated). Doesn’t do any harm apparently.

8 Kyle

Hmm, well it may not do any physical harm but I think the knowledge I was drinking my own urine would definitely cause mental harm.

9 jesse

Here I was expecting an informative article on shell corporations, offshore investments, and small business tax arbitrage. Instead they talk of urine. Oh well.

10 Four Pillars

jesse – welcome to Four Pillars! :)

11 Monica

I don’t think they are kooks. I think they are idealists who are brave enough to risk prosecution and imprisonment in order to not have their money used for something that is against their conscience.

There is a Peace Tax Trust Fund where you can send the money that would otherwise have gone to military purposes. Obviously the government has not yet recognized this as legitimate, but the money is being held in trust until the government agrees to use it for other purposes. This is supported by Mennonites, Quakers and other conscientious objectors.

12 Monica

And it’s kind of insulting to paint war tax resisters with the same brush as Wesley Snipes, who if I understood the link correctly, was in no sense connected with conscientious objectors nor was he motivated by ethical considerations.

13 Mr. Cheap

Monica: If you click through to the wikipedia link, you’ll see that tax protesters are different than war tax resisters. Wesley Snipes is a tax protester (who I was calling kooks, not war tax resisters, because they incorrectly think they’ve discovered a legal way to not pay taxes).

That being said, war tax resisters are kooks too if they think they’re going to cause any change in society (if they’re just doing it for their personal morality, power to them).

14 Four Pillars

Monica – have no fear, I have signed up Mr. Cheap for sensitivity training.

Oh wait – we don’t have the budget for that ….never mind.

15 Squawkfox

I’m not going to piss on the pee party…but wouldn’t running an incorporated business (which pays you the min before taxes kick in) help reduce taxes? OR would corporate taxes defeat this….playing with numbers. :D Guess it depends on how much the business makes.

16 Mr. Cheap

I could be wrong but my understanding is the big benefit of corporate taxation is that its capped at 25% (whereas usually income tax climbs towards 43% in Canada).

Plus it limits your legal liabilities. I don’t really know much about corporations though, so take this with a grain of salt…

17 Shevy

I’ve never forgotten Financial Jungle Guy (who seems to have dropped off the face of the Earth since this summer) saying that a couple in BC could earn $99,200 in dividends annually before incurring any income tax!

I think that would be pretty darn nice, but you have to have a lot of cash to buy the shares that earn the dividends (why do I feel I should be singing that to the tune of This is the House that Jack Built?).

18 Gov_guy

I work in a government position. If you had any idea how much of your money that we waste it would make your head spin. Just glad Im on this side of the fence. ;)

19 eric

I would like to know what way a person can NOT pay weekly contributions to federal and provincial taxmen. If a person is self-employed, they pay by installment. Why MUST a person, who works as an employee, pay each paycheck? Is there a form one might sign that forbids an employer to deduct income tax?

20 Mr. Cheap

Eric: I don’t know which country you’re in, but you can (in Canada and the US I believe) adjust your withholding (so less is deducted from every paycheck). HOWEVER, if you lower your withholding, then have to pay a large tax bill, the tax man gets angry at you (since the withholding is expected to mirror what your tax situation will be at the end of the year).

The government wants their money as soon as possible. There aren’t many ways to prevent this (although if you have a few crates of tea we can go to Boston and try to do something about it).

21 David

It’s sounds like this site is run by a bunch of university students who believe the first sentence in every paragraph they read is the whole story.
It is true that we are being taken by our government, and the tax money they take from our hard work does not pay for our education, health or any of our services for that matter. This money is put toward the debt our foolish and ignorant politicians have created for us by borrowing the money to pay for the services I mentioned earlier because they cannot manage the huge amounts of tax dollars we already give them. Your property tax pays for our education system, gas tax pays for the highways and roads to name a few . This money they borrow with interest, is money they could be printing themselves without interest but that is another story anyway if you people think we are obligated to pay income tax you can go ahead give half your hard earned dollars away but you will have to show me where in the constitution that it states that it is a legal requirement. Until someone can do this I would not make statements about people and their beliefs, especially when they are smarter than you!!

22 Mr. Cheap

David: Uh… ok.

23 MR. POWNAGE

wow david…….
that’s pretty intense…
personally i hate the idea of taxes, it was first put up to help fund stuff for the war, it was considered “temporary” wich as we all know is not.

24 Mr. Cheap

Mr. Pownage: The last thing I want to do is encourage more of David’s nonsense, but please don’t be taken in by this. Have a look at the tax protestor’s faq before you let anyone encourage you to break the law.

25 Brandon

How were roads, hospitals, schools, etc paid BEFORE taxes were implemented in 1917? Income tax was suppose to be a ‘SHORT-TERM’ measure.

26 Derek

Heres an idea.

Have you ever wondered why the government takes there part of the income tax before you get your part of your pay check.

I found a study that said if we got our full paycheck and than had to pay the government there part. Citizens would than start realizing how much they are paying the government and it would start a riot.

The government takes about 25% when you make it. Than about another 7% when you buy something with it.

27 Brandon

the easy way to pay NO income taxes is just to earn less money than the minimum which is taxed in your country.

28 Sandra

Freedom of speech is a wonderful thing, if used to provide numerous points of view and aids a person in making their own decisions. I’ve read a plethora of articles on taxation, constitutional arguments and know a few accountants. To this day there is no one who has posted or advertised an acual law of remittance or proof of governements ability to tax us. On the other hand, the only people you hear about standing up and demanding their hard earned money is so-called kooks. What’s so kooky about knowing your rights, and demanding they be satisfied? I’m sure that if more people used the net and television for information purposes, and not the usual facebook, porn, shopping and gaming there would be a shift in thinking and the public would be more than cattle and chattle. The government has complete control of the population, so much so that we allow ourselves to be exploited, robbed, poisoned and enslaved. If anyone out there has had success with reclaiming their taxes I’d love to hear about it. If anyone can show a law that states that the governement can tax at will, I’d love to see it. If people could reclaim their taxes without fear of landing in jail, think of the immense benefit. Employers could cut back wages to adjust net incomes, which would trickle down to every person. Not only would there be cheaper goods and services, but our standard of living would greatly increase. Maybe one employee households would become the norm and our children would be parented… possibly a 5 day, one job work week could be enough to live…the effects would be staggering.

29 joe

I did the whole pay no taxes for 8yrs. Now in 2009 I am paying the IRS $1000.00 A month. Whoever is thinking about this DONíT DO IT! Those that helped me with letters and such, were not doing it themselves. So if your product works why arent you using it? Like I said anyone who thinks of doing this DONíT DO IT! my life is no longer mine itís Uncle sams.

30 Derek

Years ago when I was in high school I had a friend that had a dad that was I thought a kook. He owned his own construction business. He one day was arrested for driving without a license. He stayed in jail while waiting for trial. While in jail he studied cases that were dismissed because of the person saying that driving was a right and not a privlege. His court date came and he walked in with an arm length of cases that had been dismissed saying driving was a right not a privlege and that the judge had no right taking his driving right away, even without a license. The judge said he was not going to debate this in his court room and said case dismissed. He than turned around and sued the sheriff’s office for holding him for a month. He won and asked for $6000 for a months lost wages. I saw him do this. I still do not understand how he really won that case. I was talking to him about it and he told me that was nothing. He had went to court and did not pay any taxes. I said your crazy, and how did you do this. He said he somply went to the courts and said it was against his religion to pay money to something that aided to abortions. The catch 22 is that the judge also said if you do not pay any taxes than you also release your rights to fair trials, no social security no government benefits. He agreed and I guess he does not pay taxes. I was friends with his son and I saw him to the driving case and win, I am taking him and his son’s word for it on the taxes part though. I scratch my head today and wonder if this is really true or not.

31 Hillary

Do not listen to stories about “someone I knew never paid income taxes and got away with it for years” or “the government has no legal right to collect taxes”. Read the news! The courts are all over this and the tax evaders DO NOT WIN! There are dozens of tax scams out there, and they are exactly that: SCAMS! The only people who profit from these scams are the promoters who will take your money and tell you how to avoid paying taxes. They’ll provide you with stories of how to be “natural persons”. WTF is a natural person? This is so ridiculous that it’s almost funny! The part that isn’t funny is that the people who get duped by this end up paying double what they would have been required to pay had they filed their taxes honestly to begin with. These scams may work for a year or two, or so one may think, until CRA (Canada) or the IRS (U.S.A.) uncovers all individuals involved in the scam (except for the promoters who have gotten rich off of every poor fool they’ve scammed because, for some reason nobody will tell who the scammers are). CRA/IRS will then reassess the taxes that should have been paid, plus penalties of another 50% of the tax owing, plus interest. The promoters get away with it because they don’t even try their own scams, they actually pay their taxes on the easy money they’ve earned from these fools. DON’T BE ONE OF THOSE FOOLS!

32 jimmy

I am canadian and I Have to say that it is utterly disgusting how much money the government takes from us. I am middle income and I have a working spouse. We get slammed with taxes because we’re without children and never see a dime back at income tax time. The only people that benefit are dead beat people that do nothing such as Treaty Natives, single welfare mothers and varous other leeches. It is ridiculous and the worst of it is that these people do not contribute to the tax pool. I mean REALLY!! The hard working middle class gets nothing as we simply make too much to qualify for getting any of our money back and not enough to get massive tax breaks. If you think about it about half of our income goes to the government: 30% off the check, 10-12% on every purchase, 25 cents a liter on gas, over half the cost of cigarettes. (mind you with the additonal health care costs smokers will rack up this is understandable) In the end, could we really not make out better by calculating our fair share to determine our taxes… The amount of money wasted by the Government is also unbelievable! the cost of anything government related is ridiculous as the government grossly overpays for even the most basic things. I wonder what our defecit would look like if we had people that are used to paying household bills and having to make smart decisions on a day to day basis running the show…

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