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Taxes - What's Legal and What's a Crime?













Taxes - What's Legal and What's a Crime?

Everyone has to pay taxes at one point in their lives.
It's not something people like, but you cannot escape it either.
Once you're into the game, you have to play.
However, many people don't know exactly what's legal and what isn't when it comes to paying taxes.
So, if you don't want to have to hire a criminal lawyer, later on, it's best to know that some things should be avoided when it comes to taxes.
That being said, what is legal and what isn't legal? Here's some information so you will know how to avoid committing a crime in the future.

Tax Evasion

Tax evasion refers to the act of using illegal means to avoid paying taxes.
When someone commits tax evasion, they will usually either misrepresent their income or hide it.
On top of that, some even end up not reporting their transactions.
Lying to avoid paying taxes is completely illegal and if you're discovered doing anything like this, you're going to get into trouble.
According to the Internal Revenue Code, intentionally evading tax is guilty of a felony, and you don't want to deal with that.
Fines can go up to $250,000 if you're discovered, and this applies if you're an individual.
For corporations, fines go up to $500,000.
You can even end up in prison for up to 5 years.

Tax Avoidance

Tax evasion may be illegal, but what is legal is tax avoidance.
It's completely different from tax evasion.
Tax avoidance means that you are legally minimizing taxes and maximizing after-tax income.
This is done using methods that can be found in the tax code.
To avoid tax, businesses can set up employee retirement plans, which will then keep income away from taxes, or they can take all tax credits and deductions to avoid taxes.
This is allowed under the state tax codes as well as under the Internal Revenue Code.
So, if you set up an IRA, 401(k) plan, or any other tax deferral plan, it will be completely legal.
It will help delay your taxes and you will only have to pay them much later.
You can also take a tax credit to spend the money for good, legitimate purposes.
This includes offering paid family leaves for your employees, for instance. This is legal.
Lastly, you can take a tax deduction, something that is legitimate and not a crime.
It will help not only decrease the business tax bill but also make sure business expenses go down.

Final Thoughts

Dealing with taxes is tough and if you just started paying taxes, you may not know how to minimize them or avoid them legally.
Tax evasion is not something to consider, and you should never go for such a thing.
It's a crime and you'll be fined and even imprisoned in some cases.
On the other hand, tax avoidance is a better option and it's legal.
So, from now on, we hope you know what to do when it comes to taxes.




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