Define tax loopholes

A provision in the laws governing taxation that allows people to reduce their taxes. The term has the connotation of an unintentional omission or obscurity in the law that allows the reduction of tax liability to a point below that intended by the framers of the law. A deliberate or accidental provision in tax law that allows an individual or corporation to be exempt from some provision. Most loopholes are deliberate and are created to ensure that the law is not draconian, to please a lobbyist, or for some other reason.

Used often in discussions of taxes and their avoidance, loopholes provide ways for individuals and companies to remove income or assets from taxable situations into ones with lower taxes or none at all.

Quite often, the original wording of a tax break is used to justify the use of a loophole. Lots of benign deductions and credits do just that. The connotation of a loophole as something with unintended negative consequences is what makes loopholes controversial. Loopholes are often thought of as the domain of corporations and the business worl but there are quite a few available to individual taxpayers as well.

A legit deduction is the item you’re claiming. A loophole is the item your neighbor is claiming. How to use loophole in a sentence.

They are wrong, everyone seems to say, and crusades are mounted against them time and again. Tax loopholes are one of the great mysteries of modern politics. Yet the evil never gets stamped out, for loopholes keep creeping back into the tax code. A tax loophole isn’t illegal.

It just seems that the person benefiting from the loophole often is following the letter of the tax law, but not the spirit of the law. Similarly, there are many tax. Popular tax ‘loopholes’ Local and state sales tax is deductible if you don’t claim a deduction for state. Property taxes are still deductible, up to a point. Mortgage points: Itemizers can deduct the points.

Different loopholes exist for different levels of income. Whether your income level is low, high or in the middle, this guide to the best tax loopholes can help you save money. Tax sheltering is very similar, although unlike tax avoidance tax sheltering is not necessarily legal. Tax havens are jurisdictions which facilitate reduced taxes. Loopholes come into being through the passage of statutes, the enactment of regulations, the drafting of contracts or the decisions of courts.

English dictionary definition of loophole.

A way of avoiding or escaping a cost or legal burden that would otherwise apply by means of an omission or ambiguity in the wording of a contract or. An ambiguity or inadequacy in the law or a set of rules. Consumer groups last night accused the industry of hiding crucial exclusion clauses amid pages of legalese, and warned that insurers were increasingly likely to exploit loopholes and ambiguity in the small print. It usually refers to legal, taxation, or security strategies that are exploited for personal gain.

Lettris is a curious tetris-clone game where all the bricks have the same square shape but different content. Each square carries a letter. Ridiculous or not, these tax breaks can lower your tax bill.

The Internal Revenue Service allows tax deductions to promote certain behaviors, like saving for retirement, or to make the tax code fair to all taxpayers. Related to Loopholes : Tax Loopholes Loophole A technicality in some legislation or regulation that makes it possible to avoid certain consequences or circumvent a rule without breaking the law, such as in the use of a tax shelter. The inspiration is the tax law signed by President Donald Trump in December.

American population, and of wealth was held by the top.