Tax deductions

Our current tax regime could undergo substantial change in the coming years. Politicians from the fringes of both parties want to revamp how our government funds itself through taxation. While it’s incredibly unlikely that anything truly significant will change, it’s enough to make the more paranoid among us curious how we can protect our assets from the IRS.

If you believe you see patterns where others do not, and think the man on the radio is talking directly to you, this list is for you.

MyBankTracker sat down with Alfred Polizzotto III, partner of Brooklyn’s Polizzotto and Polizzotto firm. He’s been practicing law in Brooklyn for two decades, and with his experience in estate law and financial planning, he offered some advice for people seeking asset protection. That said, he is a lawyer and a financial planner, and only recommends legal options for asset protection. For the most part, that limits his advice to No. 1 on our list: trusts.

Prepaid cards

While a traditional prepaid card requires a substantial amount of paperwork due to PATRIOT Act rules — including giving up your Social Security number — a gift card does not.

Carry one around and you’ll join the ranks of all the drug traffickers and terrorists who use prepaid cards to move illicit money around. Now we only trust drug traffickers and terrorists as far as we can throw them, but there are some things you can trust them to do right, usually. Among them is covering a paper trail.

We aren’t aware of any reloadable gift cards, so you’ll typically be limited to $250 per card. There’s nothing stopping you from buying as many of these as you like. Go all over town, buying prepaid gift cards, and you’ll certainly look like a lunatic to the cashiers — that, or a generous and prolific grandparent — but you’ll have stashed a lot of cash away where someone might not look. If you can only fit $1,000 into four cards, however, you have to ask yourself if you think four debit cards is any less conspicuous than ten $100 bills. Still confused? Here is some additional information to understanding prepaid debit cards.

More: See MyBankTracker Best Prepaid Cards

That said, there are more, um, exotic options when it comes to prepaid cards. Foreign debit card companies operate outside of PATRIOT Act jurisdiction and can keep substantially more cash on your card, totally anonymously — of course, for a price. Take, for example, the Sovereign Gold Card: you can store up to $10,000 on it at any time, anonymously, and load up to $240,000 to it a year, but it costs about $200 just to activate it.


For those who want to do things completely by the book, and have considerable means at their disposal, there are trusts. Trusts are Mr. Polizzotto’s specialty. Parents of means might put some of their money in a child’s name by creating a trust with their children as beneficiaries — this also helps sidestep gift and estate taxes.

The assets in a trust are not the parents’, but the parents can still exert a bit of parental control on the assets. While we typically think of the trusts as protecting the offspring of the wealthy from their own drug and Faberge egg habits, that’s not always the case says Polizzotto.

“They can get divorced, they can die, they can develop bad habits, they can become spendthrifts, and that money that you thought was secure could end up being diminished or dissipated, even through no fault of the child.”

For asset protection purposes, irrevocable trusts are the way to go. They provide what he called “the walls that protect assets from [outsiders].” Creditors cannot take that money from you if they come looking, because it simply is not yours.

Offshore accounts

Mitt Romney’s tax return reminded all of us just how poor we all are. It turns out he’s kept millions in Swiss money market accounts. Times have changed however, and Swiss accounts are no longer the shorthand for “tax dodge” that they once were.

Nowadays the Isle of Man is where people stash their money offshore, according to Polizzotto. For those unfamiliar, the Isle of Man is a British Crown Dependency that sits in the small gulf between Northern Ireland and the west coast of Great Britain. It’s known for its motorcycle race, the Bee Gees and, yes, offshore bank accounts. But Polizotto wouldn’t recommend it — or offshore accounts in general.

“I am not by any stretch an expert on that type of planning,” he said. “My comfort level is in the United States and having the assets maintained within our borders. There’s a little more security in relying on the banking system here.”

Though the Isle of Man probably won’t experience a coup d’etat anytime soon, nationalizing the banks, Polizzotto’s point is right on. You put yourself in a precarious position by parking your assets across oceans, in nations so underdeveloped that they’ve become dependent on providing tax havens for wealthier nations.


Certain states have homestead exemptions, laws that protect home equity up to a certain amount from creditors and other interested parties. Most states protect only a certain amount of equity — typically a dollar amount, not pegged to inflation — but some states protect all of your home equity, so long as you live there.

On the East Coast, Florida’s homestead exemption is particularly generous. It protects an entire primary residence from creditors. This means you’d have to live in Florida should you wish to take advantage of this form of asset protection, which is not exactly an attractive prospect.

That said, we’re sure there are some decent parts of Florida, but Polizzotto has a warning for anyone trying to game this exemption: “You have to establish residency…you gotta live there, you gotta have your driver’s license there, vote there, pay your taxes from there, you know — maintain a residence there. There are some people who choose to take advantage of certain jurisdictions for certain aspects of insurance and end up not making themselves aware of what that means in other areas.”

As a point of comparison, he gave the example of the number of cars in New York City you see with Florida or Pennsylvania plates, for “insurance purposes.” Insurance is cheaper in those states, explained Polizzotto, so plenty of New Yorkers save some money in the short term by registering their cars outside of the Empire State.

In Polizzotto’s words: “That’s kinda called fraud.”

Indeed, despite our prodding, Mr. Polizzotto was not interested in discussing illegal ways of hiding assets from the government.

Precious Metals

Laugh all you want at the Glenn Becks of the world, but precious metals provide a reasonable way of protecting ones assets from creditors, not to mention inflation. Using websites like APMEX and Bullion Vault, you can buy gold, silver and platinum in either bullion or coin form from various dealers for a range of prices.

Many people like to buy old gold coins, but we would advise against this practice — both nostalgia and the inherent scarcity seem to have priced a premium into these coins. If you’re looking to buy a few ounces of gold to hide in a lock box, try the bullion.

While it’s sitting there, it could very well gain value. Cash in a mattress almost certainly won’t do that — just ask Ron Paul, it will do the exact opposite. And when you want your precious metals to turn back into cash, you can likely find a way to do it without the government or other interested parties noticing (though legally, if you’ve held onto the collectible for a year or more, you owe 28 percent).

We’re not recommending anything unsavory here, but you know, there’s probably good reason that people who think the federal government is illegal tend to like gold.

Check out these new top banks that people are talking about:

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  • Sunk818

    Amex gift cards lets you load up $3,000

    • Me!

      But how long can you hang onto them without paying some kind of penalty for not using it?

      • Meribeth Clearwater

        pass a law! no fee prepaid cards!

  • Disinterest Party

    What about carried interest?  That’s how the big boys do it.

    • Joe

      Carried interest is a payment like a bonus or fee for meeting goals, it has nothing to do with hiding anything from anyone.

      • Meribeth Clearwater

        why not launder it through a car wash?

  • Lynna McMillan

    This is a ridiculous articles with clear political motives to try and cast Romney as someone who dodges taxes? Just the headline alone is unethical what self respecting reporter would actually write a story to teach people how to hide their money from the government – in essence – how to be a BAD citizen and not pay taxes you legally owe? I would think that if anyone engaged in conduct that was illegal from following the instruction in this article the author could be held accountable as well. If you want to live here, use public facilities and road, schools and healthcare then of course you should take part in paying your taxes. But really ? Whats the point of this article – to teach people to hide their money or create controversy ?

    • DITTO!!!

    • Bklynbarker

      Someone is a grumpy Romney supporter. Sorry, today is the worst day for such comments, isn’t it?

    • Joe

      If you read carefully, it is about hiding assets from things like lawsuits and confiscation.

      Trusts are a great way to eliminate death taxes. In fact death taxes are a tax on people too stupid to set up a trust. For all the talk, sophisticated people do not pay death taxes. And if your trust is offshore, such as in Saint Kitts, it is great protection against lawsuits too.

      You have swallowed the kool-aid on taxes. Public facilities, roads, and schools are a small fraction of Federal spending. 67% of federal outlays are entitlements, that is taking money from someone who earned it and giving it to someone who did not, ROADS AND SCHOOLS ARE NOT THE BUDGET PROBLEM. In the past 10 years, the deficit has grown by $1.2T, entitlement spending has grown by $1.1T.

  • this must have been initiated by the GOP and Romney F’d up face:

    Offshore Accounts: Mitt Romney’s tax return reminded all of us just how poor we all are.

    • jahartz

      Dollar for dollar, he paid about 20x more than your drafting-dodging liar-in-chief did. Romney broke no laws and paid many many millions of dollars in taxes. Why are you penalizing someone else’s success? Why don’t you go after Bill Gates or Warren Buffett and find out how much percentage taxes THOSE GUYS are actually paying? I bet you’d find fault also with the oil companies’ billions in taxes they’re paying? Did you know McDonald’s had one of the highest profit margins last year – if you’re so profit-averse, how come you don’t ask questions about others? How much Gov’t assistance did you get this past year?
      In conclusion, you don’t know what you’re talking about – Romney paid multi-millions in taxes and there’s no argument you state against someone paying millions in taxes into our Government. At the very least, present a cogent argument instead of ranting with ridiculousness which has no logic as its base.

  • nextdoor

    Clearly, we need to hide our money since Obama was elected!

    • ruby morris

      What sure we do with our money, since Trump in the house. Ask him where did he hide his money. Because he have not said or let anyone see his tax.

  • tom

    Obama’s spending and Ben’s printing presses is the reason gold is high. Glenns smart enough to understand this and advise his readers. It looks like you are not and therefore target Glenn.

  • Meribeth Clearwater

    yes, make the poor pay. (for electing Obama!)

  • First,do not get a divorce.Divorce lawyers wrecked Jack Welch.
    Secondly,do not get into an accident,for insurance investigators are far worse than the IRS.
    Third, make sure you have enough sense to keep your old car,your old house,and don’t send your child to Princeton or Yale.And don’t spend great sums of money online, at casinos or on TVG since these have become the preserves of drug cartel members.
    Lastly,do not fake bankruptcy to avoid paying off your investments in commercial or residential property

  • obmed1

    This article is why the Laffer curve works. We are only hinting at maybe rising rates on some very rich folks possibly next year. Yet already people are panicking and trying to figure every angle for avoiding the sting of the tax man. Naturally the article does not discus the common illegal methods (e.g. simply not reporting certain income or claiming fraudulent deductions). Cheating however is a huge problem and, given the limitations of the legal system, it is impossible for the IRS to catch and prosecute more then a small percentage of the worst offenders. Tax cheating is like masturbation back in the 1950’s. Virtually everyone does it but everyone thinks that they are the only ones. The government is terrified of any changes in cheating and wants everyone to feel guilty and to think they will almost certainly be caught if they do it. The net result of even a small increase in tax avoidance will be a drop in net revenue even though the tax rates increase.

  • Carl

    None of this seems very useful. Governments can and have confiscated gold – use it and you lose it. Want to trust your assets offshore? Like in some third world country or some European countries which are on the verge of bankruptcy? Using debit cards seems highly impractical. The best way to play this game is to live within your means, follow the laws of the land, and sleep well at night. If it turns out you were wrong doing the right thing – oh well!

  • borninmombasa

    As an American you can have an “off shore account” in Canada . The Royal Bank of Canada is a good place . you can open an account remotely but you’ll have to visit the branch to withdraw any funds. you will need to file two tax reports if it’s over 100K one or one report if its over $50K but under $100K . One tax report is filed with your tax return to the IRS and the other is to the US Treasury by June 1st if it’s 100K or more. you can also get an account at the Bank of China in Manhattan or L.A. and your funds will be held in Yuan . Or you can do nothing and trust smart folks like Nancy Pelosi or Barrack Obama and just hope it “all works out” . Any funds over $50K held out of the country will need to be reported. To sleep well be ignorant or be prepared.

    • Dave Taylor

      IRS form TD F 90-22.1 is required for a foreign bank or financial account which has a high balance of $10,000 during the year. The failure-to-file penalty is 50% of the high balance for the year each year.

      • borninmombasa

        you’re right the amount went down to $10,000 when the new from was required with your IRA tax return Jan 2012 ,the $50K is for the US Treasury report do in June.

    • Jake

      Too bad the yuan is pegged to the US dollar.

      • Luap

        That means Yuan is as good as the other… lol

      • Mike C

        I thought yuan was Mexican

  • JamesHovland

    Go to Somalia. No taxes. No government. You’ll love it.

  • John

    The underlying message here is that the US is not such a free country anymore. The government watches you, everything, and can take whatever it wants. Obama has proven that.

  • marcus

    “On the East Coast, Florida’s homestead exemption is particularly generous. It protects an entire primary residence from creditors. This means you’d have to live in Florida should you wish to take advantage of this form of asset protection, which is not exactly an attractive prospect.” This statement is not true. If you do not pay your home owners association dues or golf course balout assessment, whether legal or illegal, your home will be foreclosed. Four homes at Marcus pointe in Pensacola were forclosed for non payment of illegal (private) golf course assessment. there is a law suit in place to challenge the illegal assessment to bailout a private golf course. Florida is known for this kind of illegal activity.

  • Mike Cavanaugh

    Another way to screw O’Bama Bin Laden is to open your own small business and lose money I.e… fake purchases for businesses or transfer your car and other assets into the business for deduction purposes.”Buy” computers, copiers, advertising, mileage,claim losses, costs of doing business. Anything to screw that Pr*ck

  • sds

    I don’t know what this author’s problem is with Florida. Sure there are less than ideal places in the state, but what state is so much better?

    • EternalAnachronism

      He wants to polish up his credentials as a member of the arts and croissant crowd. You know, you can’t speak highly of flyover country and seem like a sophisticate.

  • m smith

    Note-buried in the Obama Health Care Bill w/ > 2,000 pages
    is provision that our Federal Government can get into our
    bank account(s) and our brokerage account(s)! The bill passed…

  • Dana Preston

    I just recieved Money from an ‘irrevocable trust’ set up by my parents. I have to live off of this money due to laid off, no more unemployment benefits after one year. I was told I have to pay 10 percent of TAXES on this money which will be 3 months of living. thinking of NOT paying the Taxes, instead live 3 more months with a roof over my head, feed myself rather than live under a bridge. I ‘may’ chose to take all my money out of the bank, hide it, and get off the grid, rader, where I live etc. I’m 58 and I feel so paralyized by the gov’t. I hear a lot of people this year will NOT be paying their Taxes owed to the Gov’t. The people are FIGHTING BACK. We are going to FALL sooner or later, why NOT NOW and get it over with. They can’t put all of us in Jail for NOT paying taxes.

    • John

      Wait until you are 59 1/2, and take a loan from the trust in the meantime.


    my parents /brother chito gave us the most value for their buck-good geneti cs(intelligence),drive , support and strict upbringing=filipino way ,encouragement.
    money was not one of them and we all graduated from medical and law schools !
    but of course they paid the tuition/school fees and we took care of them when they grew old.
    money well spent and they were exemplary …they did not need to hide it

  • pedro

    we need to hide cash with obama providing food stamps to 28 million illegal aliens. we are going to be taxed to death because of him and the mexicans

    • The1Goodelectric

      what a dick YOU r

  • Mike C

    Another option…buy any boat whether it floats or not. As long as it has a sleeping area and a toilet it is considered a home. Therefore you can claim up keep, business expenses, interest payments, etc…without having an address…

    6 boats…6 rental homes or 6 office buildings or 6 mortgage interest payments without needing any documentation for that term in Washington…


    • Glenn Ross

      But you can’t claim dock fees. That’s the biggest expense, unless it’s on land of course.

  • JEng

    so if someone has a Pennsylvania state driver’s license and a house in Pennsylvania and continues to claim primary residency in NYC for a rent controlled apartment, then he has been committing fraud ever since he had that driver’s license?

    Does that mean that the fraudster can be sued for penalties for committing fraud? What about criminal penalties? What about if he is in law enforcement?

  • chris doeller

    In Baltimore MD, A curiously large number of Immigrants, living in the wealthy suburbs of DC, own unlivable row houses in Baltimore. These boarded up properties are regularly bought and sold, mostly at much different prices than the previous transaction, but with no sign of renovation or basic repair. YES, there are nearly an equal number of native born citizens doing the same or similar things, but I find them to be mostly from the Baltimore region.
    So what is the true story? Are the houses place holders for the real money transaction, where a large sum of cash is handed to another party, but hiding as a house purchase??? No members of the media or civic leader wants to investigate.