Working on a tax free island to make money?
If you're an American, and willing to give up citizenship, good luck to you.  Otherwise, Uncle Sam still wants his due -- Americans are responsible for paying taxes on income earned anywhere on earth, regardless of their residence. According to Wikipedia, import duties on goods range from 5-22% on everything but cars (30-100%) and a handful of other goods (no import duties). Since almost everything must be imported, you will still be paying the taxman, just on the consumption side. From http://www.taxrates.cc/html/cayman-islands-tax-rates.html: There is no income tax, corporate tax, sales tax, capital gains tax,   wealth tax, inheritance tax, property tax, gift tax or any other kind   of direct taxation in Cayman Islands. Cayman Islands government receives the majority of its income from indirect taxation. There is no income tax or capital gains tax or   corporation tax in Cayman Islands imposed on Cayman individuals and   Cayman Islands companies. An import duty of 5% to 20% is levied   against goods imported into the islands. Some items are tax exempt   like baby formula, books and cameras. Tax on automobiles depends on   the class and make of the model. Tax can reach up to 40% for expensive   car models. Financial institutions that operate in the islands are   charged a flat licensing fee by the government. A 10% government tax   is placed on all tourist accommodations in addition to the small fee   each tourist pays upon getting on the Caymans. The Cayman Islands   government charges licensing fees to financial institutions that   operate in the islands as well as work permit fees for expatriate   employees ranging from around US$ 500 for a clerk to around US$ 20,000   for a CEO. The Cayman Islands has an income tax enacted, it is just currently 0%.  It raises revenues from its tourism, import duties, and business registration.  It is part of the UK commonwealth and therefore enjoys the military protection of that federation, but doesn't have to spend on it. But unlike the US, the UK does not have an umbrella federal income tax on its overseas territories, so the Cayman Islands doesn't have to pass that down to its citizens nor do its citizens/residents have to be encumbered by one. It was not taxed by the King when it was first incorporated (hm, might need to fact check that). They also didn't go to war with the king over some small tax, so they got treated differently than some other North American colonies you might think of. The Cayman Islands is not the only government that raises revenues this way. Delaware also has a 0% income tax and raises the majority of its revenues on business registration (and perpetual franchise taxes on those businesses), allowing it to spare its citizens from passive income taxes. But unlike a US state, a citizen or business in a UK overseas territory does not have federal regulatory overhead, making it more attractive as a worldwide financial center.
"Donations, particularly those in the context of you providing a free service (software, libraries, etc.) are a notable grey area in tax code. Simply naming a button ""Donate"" doesn't necessarily classify the money transfer as a ""gift"". The IRS can decide that it's money you're being paid to continue your excellent work/service, making it taxable income (unless you're a registered non-profit organization). In the instance of Patreon, and many other crowd-funding services, you're providing a certain level of ""service"" for each tier of donations (such as early access or something, I'm not sure what you're offering), which means they're receiving consideration for their donations, which most likely makes it fall into taxable income (again, unless you're a registered non-profit organization). State tax law is even more convoluted, and you should consult your tax professional for clarification on your specific situation." (a) you give away your money - gift tax The person who receives the gift doesn't owe any tax.  If you give it out in small amounts, there will be no gift tax. It could have tax and Estate issues for you depending on the size of the gift, the timing, and how much you give away in total.  Of course if you give it away to a charity you could deduct the gift. (b) you loan someone some money - tax free?? It there is a loan, and and you collect interest; you will have to declare that interest as income. The IRS will expect that you charge a reasonable rate, otherwise the interest could be considered a gift. Not sure what a reasonable rate is with savings account earning 0.1% per year. (c) you pay back the debt you owe - tax free ?? tax deductible ?? The borrower can't deduct the interest they pay, unless it is a mortgage on the main home, or a business loan. I will admit that there may be a few other narrow categories of loans that would make it deductible for the borrower. If the loan/gift is for the down payment on a house, the lender for the rest of the mortgage will want to make sure that the gift/loan nature is correctly documented. The need to fully understand the obligations of the homeowner. If it is a loan between family members the IRS may want to see the paperwork surrounding a loan, to make sure it isn't really a gift. They don't look kindly on loans that are never paid back and no interest collected. No, there is no special leniency given to first time tax payers. In general, this shouldn't be an issue. The IRS collects your taxes out of every one of your paychecks throughout the entire year in what is called a Withholding Tax. The amount that the IRS withholds is calculated on your W-4 Form that you file with your employer whenever you take a new job. The form helps you calculate the right number of allowances to claim (usually this is the number of personal exemptions, but depending upon if you work a second job, are married and your spouse works, or if you itemize, the number of allowances can be increased. WITHHOLDING TAX Withholding tax (also known as “payroll withholding”) is essentially income tax that is withheld from your wages and sent directly to the IRS by your employer. In other words, it’s like a credit against the income taxes that you must pay for the year. By subtracting this money from each paycheck that you receive, the IRS is basically withholding your anticipated tax payment as you earn it. In general, most people overestimate their tax liability. This is bad for them, because they have essentially given the IRS an interest free loan (and weren't able to use the money to earn interest themselves.) I haven't heard of any program targeted at first time tax payers to tell them to file a return, but considering that most tax payers overpay they should or they are giving the government a free grant. You can invest for yourself, be your own boss, make your own hours. My boyfriend and I both trade for our personal income, and we work from home and have these as our only jobs.. he chooses to work longer hours and devote more time to it, because he values money over free time more than I do. If you consciously choose what you value most (the ratio of work time to free time), you can make it your goal to secure a job which follows your values. If you let your job dictate your hours/values for you (for example, accepting a position somewhere because it will make you a lot of money, but it will leave you with little free time) you may be unhappy if that's not what you want. I think people have a lot more control over their happiness and work hours than they give themselves credit for. Good luck in your path! There is no tax code I know that would grant you such a privilege. And it just isn't practicable. In your examples, you always sold your product and were thus able, in retrospect, to give a value to your work. What if you don't sell your product? What if in one case your worked hour is reimbursed with one price, with the next product at another (i.e. difference in margin)? No, it won't work like that.  And by the way, I think you might have got some definitions upside down. What you want is a salary that your own company pays out to yourself and you can deduct from other profits. But as long as you can't afford to pay yourself a salary, and you don't have access to investors who are willing to front you the money, the time invested is your personal investment and cannot be deducted anywhere - though it might pay off nicely in the long run. That's the risk entrepreneurs take. "As you may know, the interstate system could have been easily built where every car/truck is charged to use it.  What about the space program? Absolutely no income from this and absolutely no benefit on earth... except additional jobs...  As for giving tax break to corporations, this is not the case!  This is a case of investment so a corporation will employ people in the USA instead of another country.  As for not ""living up to promises"": if a contract is written, and they don't live up to promises, then you know what will happen next." "No, Skiffbug is not English.   Second, it's very clear that the type of method considered ""special"" by the tax code is clearly not labor, but capital gains and gains from ""carried interest"".  If you actually take 3 seconds to read my comment, I am saying both should be treated in exactly the same way, and taxed at the same progressive scale." Are you planning to not pay taxes? Any time someone has income in the U.S., it is subject to U.S. taxes. You must file tax returns (and pay taxes if necessary) if you have income above a certain threshold, regardless of whether you're not authorized to work or not. If you plan to intentionally not pay taxes, then that's a whole other matter from working without authorization. Working without authorization is an immigration issue. It probably violates the conditions of your status, which will make you to automatically lose your status. That may or may not affect when you want to want to visit, immigrate to, or get other immigration benefits in the U.S. in the future; and at worst you may be deported. It's a complicated topic, but not really relevant for this site.