Like many in Plano, you may view paying taxes as a necessary evil: you may not like that you have to do it, yet that does not change the fact that you have to. This is why claims others make professing strategies on how to avoid paying taxes are often seen as such welcome news. However, many that we here at the Barbieri Law Firm have worked with in the past have found themselves the subject of criminal scrutiny after having employed such strategies. If you find yourself in the same situation, then answering any accusations being made against you requires understanding the difference between tax evasion and tax avoidance.
Have someone told you that you do not need to report certain types of income? If so, such advice should be ignored. According to the Internal Revenue Service, any attempts to conceal earnings for the purposes of not having them become subject to tax is tax evasion. Such activity is illegal and could leave you facing hefty penalties along with having to pay back taxes.
Employing strategies that serve to lessen your tax liability, however, is referred to as tax avoidance. These strategies are perfectly legal and even encouraged by federal officials. One of the most common forms of tax avoidance is claiming tax credits (such as a credit for claiming dependants). Others include:
- Deducting your mortgage interest, property taxes, and charitable contributions
- Deducting personal business expenses
- Holding on to investments to avoid capital gains taxes
- Contributing pre-tax dollars to a retirement account
While these strategies are legal, you must be clear, transparent and truthful in reporting them. You can learn more about responding to accusations of federal crimes by continuing to browse through our site.