What’s the Difference Between Tax Avoidance vs. Tax Evasion?

What’s the Difference Between Tax Avoidance vs. Tax Evasion?

“I love paying taxes!” said no one ever!  The truth is given a choice everyone would most likely keep their hard earned money rather than give it to the government.  Unfortunately, taxes are a part of life and almost no one is exempt.

However, figuring out how to pay fewer taxes is practically a national pastime.

Trying to keep your taxes as low as possible is no crime. In fact, when done correctly, often with the help of a professional, you can keep much more of your hard earned money than you might have expected. The key is doing it legally, which is called avoidance.

Avoidance sounds bad and you might think it is essentially the same as evasion. The reality, however, is that avoidance is totally legal while evasion is illegal. So how do they differ?

Avoiding taxes is the act of minimizing your taxes by using means approved by the IRS, such as tax deductions, taking tax credits and setting up tax deferral plans.  Businesses can also use tax avoidance measures, like leaving income in other countries in order to avoid being taxed on it in the U.S. These are all perfectly legal ways of to avoid paying higher taxes.

Evasion, on the other hand, is using illegal means to pay lower taxes or not pay them at all.  Providing false information about expenses or income or purposely paying fewer taxes than you owe are two common forms of tax evasion.

Essentially, if you knowingly report inaccurate numbers or fail to report your income, period, that is tax evasion and if the IRS catches you there will be consequences.

So, when you’re filing taxes you should definitely take every measure possible to avoid paying taxes. just make sure you don’t cross the line and become guilty of evasion.

We hope you found this article about “What’s the Difference Between Tax Avoidance and Tax Evasion?” helpful.  If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page  or our website at www.GROCO.com.  Unfortunately, we no longer give advice to other tax professionals gratis.

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Alan Olsen, CPA

 

Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com.  GROCO is a premier family office and tax advisory firm with clients all over the world.

Alan L. Olsen, CPA, Wikipedia Bio

 

GROCO.com is a proud sponsor of The American Dreams Show.

 

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The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.

Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.

The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.

They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..

American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:

Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…

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MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness.  It’s mission statement:

In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.

Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.

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