Insurance Money isn't Free

I am Canadian and I swear I have heard more about business on this show than in all my years in school.

I find that the real shady tax write-offs are stuff like... donating fine art.
Like, a rich person buys a rare painting for 100k, then donates it to some museum and it's valued at 250k by someone, so they can get away with saying they donated something worth 250k.
At least, that's what I've heard has happened in the past. I dunno if people get away with that anymore.

Locks and security are to keep honest people honest, bad actors will find ways around stuff.

One thing to keep in mind about billionaire making donations is that they sometimes create the charity. Those charity can be used to influence the public and the control of the charity can rest with people in the circle of the billionaire donating the money.
Once you reach a certain amount of wealth everything is taken care of for the most part. You can always find ways to spend that money but influence is very valuable and tax free in these cases.

People are just so bad at understanding taxes, it hurts so much.

That whole story about people breaking into cars sounds so fantastic to me, like where I live I cannot do that because if they find out I have nothing to steal, they will just take the car or my tires at the very least...and if I'm close by I will just get hit in the face for not having stuff for them to steal and then lose my car. So it is cheaper locking my car and having to replace a window than having to replace a car.

There's some industries that are worse off than others. There was an uproar here in Sweden in the seventies driven by one of our most beloved authors of childrens books where she ended up in a situation where her tax ended up at 102% of her gross income that year because of particulars of how value of her works were counted as a self employed writer versus actual income. So she wrote a parody childrens tale about it, including metaphorical critique against tax system allowing the finance minister to enter his full income into the lowest tax bracket by buying real estate with debt, and when he replied that she couldn't count that well, and shouldn't be expected to as a childrens book writer and woman, she replied that he surely couldn't have counted that well, but her numbers came from the Swedish tax agency, and surely they would not have counted wrong. This was a major cause of the social democratic party losing the election for the first time in 44 years. (Author's name is Astrid Lindgren, her childrens story/letter to one of the largest newspapers in Sweden was called Pomperipossa i Monismanien, and it's a funny read for a Swede born way after it.)

insurance adjuster of over 21 yrs here, there are so many misconceptions and misunderstandings regarding claims - and what may be true in Canada is not true everywhere else. Here in California, if you have several claims, then you may see an increase in premiums - but one or two non-liable claims shouldn't have an effect on your premiums if you go through a good carrier.

I remember a time when people kept telling people not to worry about businesses being damaged "because they have insurance" as it it really were just free money, even if that type of damage was covered.

Maybe it’s different in Canada, but it’s common in the US for glass coverage to have no deductible and is unlikely to affect your premiums.

I argued to my family about tax bracket and how taxes work ( I’m in the same province as Linus) it is crazy how much they argued and didn’t believe me. I mentioned that taxes work like Linus said. Also my wife had medical insurance at work. We paid $1200 a year in insurance and it only covered one dental visit a year that cost $600 before insurance. Let me not pay insurance and put that $100 a month I save into a separate account for my dental visit in the long run I save money.

Warning: when it comes to amortized taxes or cases where governments give rebates for items, read the fine print.
My parents ran into a case where they had a car for 6 years but didn't realize we had to keep it for 7 years.
Then, a random tax inspection occurred, they went back further than the 7 year maximum, (never allow them to do that... ever) found the evidence of the sale and promptly charged my parents for the entire "rebate" + interest and if I'm not mistaken a penalty too.
Always read the fine print, and never "cooperate" with the tax guys more than what's required, even if they seem nice.

The amortization conversation gave me flashbacks to the massive end of year project in my mine econ class, where we created a massive spreadsheet with hundreds of lines of equipment and their amortizations and costs and tax values and government subsidies for each one.

I really like the ideas of IoT, but due to the fact that you cannot self host as an option and things requiring internet for their basic function makes them a deal breaker.

On the topic of tax write-offs and donations... Usually, when used as tax avoidance, the donation will be made in the form of material goods written-off at original MSRP, which is so much higher than the real payed-from-accounts cost of the donated product that it's less than the cost of paying the income tax on the MSRP, hopefully to the point of making a "profit" in the form of a 0$ tax bill.
If they're any good at their job, your "flipper" will suggest donating your older computers and parts to schools and non-profits with a charity receipt for the full retail prices of said computers and parts (ideally struggling entities that don't get many donations and won't argue about how much of their charity-receipt quota goes to your write-offs).

For some insurance policies (like my own), the glass coverage adds cost onto the premium, and you can make X amount of claims per calendar year (I think mine is 2). However, the flip side of it on the insurance policy is that glass claims don't raise the premium after a claim. So while yes, it's not free money for my glass coverage, I am getting back the money I paid to the insurance company up front. Paying, say, 200 a year more, is a lot easier to stomach than a 400 dollar window out of pocket. It's especially helpful in Alaska where thrown rocks and tire studs are extremely common, and defroster cracks that span the whole windshield in the winter make a replacement yearly almost a foregone conclusion. Paying 30ish dollars a month is far easier to budget for.
Granted, this all comes down to how your insurance policy is written out, so make sure to read over the entire thing. But not all insurance policies work the same.

Having your own business does make all the insurance and tax stuff a lot clearer. Income tax, VAT and all sorts of other deductibles. Actually pretty fun when you understand it all (yeah I'm nuts)

When people refer to donations as tax write offs cuz millionaires give exchanging donations to each other’s foundations, which pay a salary to family members often and are just a tax free vanity project…

In Switzerland, if you "own" (as in owe the bank) the house or apartment you live in, you get a virtual amount you COULD make if you rented it out, which you're obviously not, added to your income.
So not only do you get to pay taxes on a good 10k income you never had, the percentage also rises as the tax is progressive. We don't deal with brackets... the percentage is just steadily rising with your income.
So yeah, owning the property you live in not only gets you taxed more, it also gets you taxed more on the actual income.
Granted, you can deduct the mortgage interest but obviously that NEVER amounts to anywhere near that virtual income... It has also led to Swiss people telling you, with a straight face, it's a good idea to not completely pay off your mortgage so you can save on tax.
Problem is, you save a few hundred bucks on tax but you pay a few hundred bucks a MONTH to the bank in interest. There are enough people that go into retirement with only one third of their property paid off and they then have to sell it because they can't afford the tax on it. I shit you not.

I think there are examples from some investigations around donations made to shy away from paying taxes where there are entire webs of fiscal bodies, so the money given is one side, the money received the other side. From a broader perspective is like moving own money from one pocket to another. Like even i fit's not coming all back, the part that doesn't goes to pay for some of your desired expenses. I think i saw a documentary some time ago about the web build by the Koch brothers where a big chunk of the would be donations are really spend for lobbying style focused directions that do come back to support the donors through other channels, type of taxes, policies and such.

Regarding tax write-offs, afaik there have been some historic systems that have been used by rich people to actually profit from tax write-offs in the US, usually involving donating high value assets to non-profit organisations that are owned by trusts they control, and which still allow the original owner access to the asset. I'm not sure if the loopholes that enabled these things have been fixed, or to what extent it was ever a large scale practice, but that may be where people get the idea from.

On tax write offs it's not like you're not purchasing anything. When you donate to a tax deductable charity you either get influence and power over a certain area(especially with political action charities) or you get PR.

Get a fancy lock/alarm for the insurance deductions, then leave the window open so burglars don't break your fancy lock.

Linus spot on with insurance everyone could learn from this.

You get a tax break in later years though, it often works out better that way. You can only reduce your tax basis to 0 in any given year, so depending on your other financials you might not be able to fully realize the tax savings. Over the course of two years you're going to pay more total tax if you make $0 in year 1 and $500k in year 2 than if you just made 250k each year.

Amortization only applies to intangible assets, it'll be called depreciation in the case of the camera. Also depreciation over the life of an asset is very appropriate, they don't want to give you the benefit of a capital expenditure in the year of the expenditure because the asset will be enjoyed over its lifetime.

I was visiting Florida a few weeks ago and every other billboard had advertisements for "were you in an accident" lawyers. This is in addition to plentiful local TV advertisements. If you think about it, those advertisements are paid for buying suing car insurance companies, who get their money from drivers paying for car insurance. Insurance companies aren't going to lose money to operate in state, so the drivers in Florida (or at least those driving legally with insurance) are the ones paying for lawyers to just advertise. And yes, Florida does have higher car insurance premiums than most states.

Linus saying he is bad with security stuff, aged very very well..

when i pay my car insurance for a year and don't get in an accident the insurance company is certainly taking free money when they don't give it back to me.

Funny, I just got a $50 payout from my credit card's accidental damage protection (no annual fee) on a new item I bought and broke some glass on within the first week. No deductible. Pretty amazing actually.

Some insurance company’s offer a free glass replacement once a year, you don’t pay excess and it doesn’t count as a claim. Mine does here in aus :)

I have glass insurance on my vehicle. $3/per mo. and they do not require you to pay the deductible nor does it affect the premiums. I had to use it once, they came out same day and replaced it in the parking lot while i was at work. So, In some cases, Glass insurance is not necessarily a bad thing if you get the right rate from the right insurance company.

Stuff about media production taxation is pretty interesting, much simpler for manufacturing where you're just taxed on profit from goods sold. Still amortize capital expenditure deductions, which I'm told is why vehicles and other equipment is leased.

1:34 Aren't American and possibly Canadian houses normally built completely out of wood and drywall, or is it just internal walls? I always laugh when I see locks on doors in a drywall house on HGTV.

Car insurance thing sounds strange to me. Here in Russia you just pay every year and if insurances covers type of damage and it’s not super expensive they just fix it for free

Our auto insurance policy has a $1,000 deductible. Even if you're 100% not at fault, they absolutely will increase your policy cost when you use your own insurance.

I remember the last time Musk donated money to charity it was to himself, so he did sort of get free money.

That amortization of labour is insanity lmao

Does the law separately mention your final video and the copy uploaded to youtube? Are they the same thing for tax purposes, or is one your asset while the copy is owned by youtube, and they figure into your and their respective taxes separately or something?

Glass insurance is different … it’s usually a 10-50 deductible and is a rider on your regular policy it’s not the same as a comprehensive or a accident claim

"Do you even know what a write-off is?"
"No...but they do! And they're the ones writing it off!"

I guess insurance if can is a little bit different cuz I can tell you almost every major Auto insurer in the US factors and having to replace windows every couple of years when you get the quote they're expecting to have to replace your windshield every two years they don't care whether you do it or you don't do it it's so gets Auto factored into your quote

I had someone at a convention where i was hanging out with big content creators of the time try and tell me that one content creator wasn't being nice getting everyone Pizza because it was going to be a "Business Right Off" I just sat there and thought "They still just spent almost 200 dollars on pizza dude, I don't give a fuck."

This is honestly why I hate TikTok with every fiber of my being. The amount of misinformation they spread and the know-it-alls that think they understand the concept of taxation after watching a 30-second video is just too much.
Literally got into an argument with a family member that "did their research," aka watch 3-5 TikToks, over how marginalized taxation works. Bro literally told me I don't know anything when I work for a law firm that specializes in taxation and have dozens of close friends who are accountants. This is a clown world. 🤡

Wait, you spent a thousand dollars on a desk? But isn't it a tax writeoff?

Sadly they will STILL break the windows without checking the door. If you’re fed up, leave a window down or the back hatch or a door open.

My car is always unlocked as well.
I think noone would assume i have anything of value in my messy car (the car has scratches/dents, and everything but the front two seats is always full of stuff like jackets and whatever)

There are all these Finance TikTok influencers that think you earn less if you earn above an income band so they advise you to NOT get a pay increase and to stay in your income band...they don't realise how the marginal system works...

It's a huge issue that massive corporations can create clever tax structures to dramatically lower their tax in a way small businesses never could. It's absurd how little tax Amazon pay in most countries they operate in compared to their smaller competitors.

I had my car lock chiseled out to open my unlocked door. My first step as a non thief try the handle first.

glass coverage doesn't raise the cost of Eeyore Collision or comprehensive policies very much, that's why it's a specific policy just for glass. Also, a windshield for a newer car can be thousands of dollars.

In Germany we have something called "Teilkasko" and they will pay for everything that isn't caused by regular traffic and it won't raise your Premium

had my bike stolen a few years ago and got 200 euros
however with taxes and stuff that went down to about 160 if i remember right but it only took a few days till the money was on my account

What people fail to understand is that for 99% of cases, a "tax write off" means if you don't have a good accountant to spot that edgecase situation, you'd either pay taxes twice over an operation or you'd pay taxes on money you didn't make. It's not a "I avoided paying taxes", but a "I avoided paying more taxes than I legally should".

Every car insurance policy I have ever had, would cover glass/keys and won't affect the price of your insurance

Pizza shop problem. Only takes X amount of people for peak efficiency. The security guys don't cut into the main product on a proper team. For an indie one guy, though, different story.

Mandatory personal finance classes in school are long overdue.

We would be the like "Independence Day" aliens: where a single virus uploaded from a single laptop was able to shut down their entire network.

I see what he means about the insurance, BUT a lot of insurances (at least here) have a special clause specifically just for windows that allow for a certain amount of glass replacements per agreed upon time frame with no deductible and no increase to the premium. I pay 25 euros a year for that.

In europe (Netherlands) i even report damage of 70 euros as it has no negative effect.

Here in the U.S. you can donate random stuff to goodwill for a tax writeoff, but you basically get to decide how much the writeoff is worth. Obviously you have to be somewhat reasonable or else you're committing fraud.

Re: insurance deductible. THE point of insurance is to cover things you expect to NOT happen, that would wipe you out if you had to pay out of pocket. It works because the total premiums for the pool of people are more than the occasional large payout. If it's something you're fairly sure will happen, then the insurance company will need to charge at least that much to stay solvent. So for regular things you should just save the money up to pay for it.

Genuine curiosity, what’s the assumed useful life on your content assets? I understand that accounting rules might force you to amortize, but given the behavior of PLclip views you could probably argue that the useful life is very short, meaning from an accounting and tax standpoint your financial statements would look identical except for a few million bucks moving from SG&A to D&A. Does Canada have annoying rules where they force you to assume a crazy long useful life for no good reason?

No idea if this is true. I read it somewhere else on the internet a long time ago so it may very well not be true:
The best way to do a donation tax deduction would be to give a modern artist 10k $ to make a piece of art. Have your qualified art expert friend value the painting at 100k $ and then donate it to a museum or something.

In America amortization is typically a choice and it's usually advantageous if used properly to minimize taxes in the future.

And then there's LockPickingLawyer that shows that both dumb and smart locks are too easy to break into. Might as well just bolt the door at this rate.

Oh linus, you don’t know the charity and donation shenanigans around donating but keeping full control on the donation money and on top of it, donation can be used to invest in your own company or company you are interested.

I think he meant Capital Allowence by amortization

Insurance agent here. Canada might be different but a class claim with most American companies will not raise your insurance premiums. If you file to many comprehensive claims aka glass claims you could be put in a different tier that could raise your premiums. I will agree with you that people dont understand insurance what so ever. If you have a big loss and the insurance company pays for it... you become a much higher risk and that loss stays with you for 3-5 years so your rates will increase for that amount of time. Always have an agent to talk to before filing a claim!

Bro…what how is there not accelerated depreciation for content creators?
I’d be interested in hearing more about this and what NAICS code or whatever you guys got into. Labs is setup as it’s own legal entity right?
Anyways sounds like there’s legit room for some lobbying to be done. I would follow that the hell out such a lobby on Twitter.

Okay, I'm not sure how it works in Canada, but I'm sure there's different ways of doing your taxes where you can write stuff off all in one go?
If it's the same in the UK, then I guess it would depend if you want to take advantage of depreciation etc. Maybe if you do simplified accounting you could do it; but you may lose certain benefits of your current accounting method.
Although I am a sole-trader, so it's likely very different for yourselves.

Yup taxes suck. That is why people like me have jobs in the US. To Linus’s last point about labor being included, that happens in my company as well. We primarily manufacture inventory. In the US you are required to determine how much of the cost of labor is in the inventory and are only allowed a deduction when you earn the income by selling the inventory. This concept is being applied to PLclip videos. They are trying to force you to determine how much income the video will generate and then you can take that portion of development cost when you recognize the income. Now here is the biggest reason why taxes are complicated: CASH INCOME and TAXABLE INCOME are not the same thing. Most of Linus’s complaints are you paid the cash today (paid wages, produced a video, bought equipment, etc.). So you lost that cash income and you don’t get an equal deduction on book income you pay taxes on. So while you get the full deduction of what you spent eventually, you are still without the cash you had. The flip side is if you were in the magazine subscription business and you had all customers pay up front. You get cash income immediately. But you don’t have to recognize and pay taxes on that income until you produce the magazine and ship it out. Some businesses benefit from the cash concept where others don’t. Linus unfortunately is in the camp of having more cash go out before getting the tax expense than having cash come in before recognizing the income.
Small companies and individuals in the US don’t deal with this as much as they are Cash Taxpayers. When you get cash, you earn it. When you spend cash, you typically get the expense (some restrictions, so consult your accountant). So Linus’s situation isn’t shared by individual typically unless they actually deal with their company’s taxes (or have a spouse that talks about it constantly).

I'd leave my car unlocked if I didn't have all my tools for work in it which is worth more than the car itself

No bad actors would probably not be better. Bad actors makes our technology more robust, so less accidents happen and better design happens

How is a media company employee any different from, say, an antivirus developer then? The product is going to be out there making money over time.

I think Linus overshot his joke at 1:35
Should have said: "if they want to get in they'll just break your Windows" (so it's both actual windows and the OS lol)

Wait Canadian company's don't have an annual investment allowance? In the UK you can claim 100% of equipment costs up to £300,000 (increased to £1,000,000 temporarily) provided it's equipment. Buildings are different though

if there where no "bad" actors not only in infotech we wouldnt have space travel among many other things.

The question is actually where they donate to, normally billionaires are donating to their own foundation, so they still have control and direction over all that money.

Found out today linus only knows 4 first world countries 😂

Fyi, in insurance pricing, it is generally understood that the first 2 accident, liable or no, are not good predictors of loss and should not affect premiums. Same logic applies to glass.

Insurance is free money if your the one that gets hit and the other party is responsible and you don't care to fix your car, but still even then it technically isn't free because of the fact that the car now is worth less because it's been in an accident and that effects resale value

LTX/CSF idea:
What can you steal from Linus' car in 5 minutes

I've found that a great many people who say "Well, you can just do X" have never actually done X.

Is it even worth having insurance then?

As far as Gen Z goes anyways, I blame Mors Mutual Insurance for the misconceptions

Isn't LMG some form of LLC or why does Linus pay income tax instead of corporate tax on revenue?

Sysadmin here, not afraid of IoT devices like thermostats.

I have unlimited glass repair for my vehicle with no excess to pay and I choose my own repairer so there is zero delay. My premium after several glass replacements is still cheaper than competitors. This is of course an exception and all my other insurance policies for home and such are garbage.

"Fuck it, just break my window and take it" lmao. Spoken like a guy who's wife has a boyfriend

The thing with "what if we didn't have to spend all that time and effort [and money] on security" is that... that's not just a hypothetical, it's something that's actually achievable. Most crime is rooted in people's needs not being met in some way or another, and so it can be massively reduced just by making sure that good care is taken of everybody. The US (for example) does the opposite of that, with its harsh and strictly punitive legal system and total lack of socioeconomic safety nets, and so it's not a surprise that crime is a much worse problem there than in countries that actually take care of their citizens - leading to much higher individual/personal security expenses.
And this is really pretty logical when you think about it: treat people poorly, and they will treat others poorly in response.

Kinda like EVs and gov credits. Is it enough of a credit for anyone not already on the edge of or already able to afford an EV? No? Why would I care then! Unless it's so important or valuable to me that it doesnt matter if they even have the credits, at all or at any level.

Not in germany. Here you can save money by donation money

Bro, I can't even think in non-bad actor way. Thinking about SQL injects, CSRF, hijacks, sanitization, input types and shit like that is what I base my code structure at. Although I don't agree with the video's message. There's no free lunch? It's not like insurance comes by default like warranty. You actually pay for that shit ?!?

1:43 > You're notoriosly bad about a lot of security stuff.
Oh well

wait that’s how american tax works this is awesome in my country your whole income gets taxed depending on your total income so the more you earn the more tax you pay so actually with a normal salary you only get half your income after tax and compulsory deductions 😅

Bro is a home inspector and is covered by an insurance in case he get sued. That sadly happen on a semi regular basis. Why? People sue the home owner, and bring in the inspector too.
Short story, he is covered. But with the deductible and the insurance raise over the few years, he made the math: it cost 10000$ per claims.
It is like the loto. It may be as simple as sending a letter from a lawyer (something like a 400$ case), as it can be a full blown lawsuit (easilly over 50k + damages). Having a group of lawyers often cause the other party to drop the case or modify it to exclude him, while if he get a single lawyer it's a full blown one.. So it does cost less for the insurance compagny (they are scary) than if he would take the case (he's a nobody).

What if you give money to your own charity?

in Germany, if you have a partially comprehensive car insurance and you get a crack in your windscreen or hit a animal on the road, it is more or less free for you. you don`t get rated higher for those things. In most contracts you have to pay 150€ excess for the damage but the rest gets covered or in some cases you have to pay nothing additionaly.

You can get a $0 comprehensive deductible for generally not much more added to your premium. To the point of going through the insurance will result in higher premiums, once the claim has been resolved if your premium increases then switch carriers. I have had insurance companies raise rates after payouts and I move to someone else. Generally the other company, absent it being a claim related to your safety as a driver, won't penalize you as they weren't the one that had to pay out. Play the game. You have insurance for a reason. If you're going to keep paying things out of pocket out of the fear of a rate increase then you are doing exactly what your insurance company wants.