Individuals who intentionally attempt to evade paying their taxes can face hefty penalties.
How hefty? Fines can reach as much as $100,000 and crimes can carry jail sentences of up to five years imprisonment. However, not paying all of your tax does not automatically make you a criminal.
Although it’s a thin line between tax avoidance and evasion, avoidance is simply doing what you can to lower your effective tax rate. This is something that is not only perfectly legal and allowed, but actually encouraged.
When you claim a mortgage interest deduction or fill in your dependents’ information, you are avoiding tax. In fact, every big box tax preparer has built their entire business model on tax avoidance, touting how [...]