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Tax Life Hacks

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Tips, Hacks, and Deadlines

Pay your Advance Tax in Advance…15th March is the deadline for paying your Advance Tax for the last quarter of the F.Y. If you are wondering about who needs to pay Advance Tax: Well, any individual having a Tax Liability of INR 10,000 or more from Income other than salary has to pay Advance Tax.

Tax Loss Harvesting… We have all heard about it but not really sure how it’s done. Now you don’t need to wonder. Tax Loss Harvesting is a way to reduce your Taxable Income by setting off your Profits (Capital Gain) against your Losses (Capital Loss). It becomes more relevant as traders can reduce their Tax Liability amid the economic slowdown. 

Investments that will save on Taxes… If you wish to make Investments under chapter VI A and claim Tax Deduction at the same time, 31st March is the last day to do so. But, in order to save Tax, don’t make hasty investments. ‘Catch-up Investments’ should be made carefully only after evaluating one’s personal financial goals.  

How did Amazon Avoid Federal Tax for 2 Years in a Row…

Amazon is a very sophisticated tax player. It is very much the canary in the coal mine.

1st, There is a Tax Bill…President Trump’s signature tax legislation lowered the corporate tax rate from 35 percent to 21 percent. This immediately slashed Amazon’s tax burden.

2nd, Amazon’s shrewd use of revenue…The tech giant has invested so much in themselves over the years that sometimes it didn’t even make any profit. And when that happened, in 2018, the carry forward losses eligible for federal write off amounted to $627 million.

3rd, The massive federal tax credits…Amazon has poured billions of dollars into R&D of technology, plants, equipment, buildings and other expenses which made them eligible for a tax credit. Furthermore, Trump’s Tax Cuts and Jobs Act supercharged this credit. This was a perk that Amazon cashed in on…the very idea behind expanded credit.

4th, Industry performance…The U.S Government planned to help companies invest more in machinery and training for higher productivity. A company, as profitable & cash-rich as Amazon realized the need for those investments. Amazon had $1.4 billion in total available tax credits by 2018.

5th, Stock is gold…Amazon uses ESOPs extensively. This allows Amazon to pay employees using stock and then take the value of that stock off their tax bill. The huge size of that stock-based compensation affords Amazon a large write-off!

Amazon avoided Federal Tax on more than $11 billion dollars of profit in 2017, despite being such a massive company. And somehow they got a $129 Million tax rebate for the year 2018.

Byte of the day

“One of the only ways to get out of a tight box is to invent your way out.”                                                                                                        –Jeff Bezos

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