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15760 Ventura Blvd, Suite 610 Encino, CA 91436
FREE CONSULTATION818-436-2775
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Personal, Affordable Payroll Services, Bookkeeping, and Tax Processing for Small Business throughout Los Angeles County.

Learning the Difference Between Tax Evasion and Tax Avoidance

Anyone who is used to having to write the IRS a check when tax season rolls around as opposed to receiving a check from the IRS should learn the difference between tax evasion and tax avoidance. Even if you have a tax accountant in Los Angeles, you still owe it to yourself to learn more about tax terms. After all, it’s your money that’s at stake.

Tax Avoidance

Tax avoidance can be defined as the legally permissible exploitation of the tax regime in a way that benefits you. It’s often done as a way to lower the amount of tax that you have to pay by the April 15th deadline. One vital component of tax avoidance is that you have to make a complete disclosure of your tax information to the IRS. Switching your business structure by setting up an offshore company in a tax haven or incorporation and tax deductions are both examples of tax avoidance. Talk with your tax accountant in Los Angeles to see if there are any ways that you can legally lower the amount you have to pay on your taxes.

Tax Evasion

Tax evasion is essentially the illegal evasion of paying taxes. Trusts, firms, individuals and other entities that misrepresent or hide their financial affairs from the IRS and other tax authorities are committing tax evasion. Other examples of tax evasion include purposely failing to claim gains, income or profits and claiming more deductions than an individual or company qualifies for.

Justification

To some, tax avoidance is the wrongful dodging of a person’s individual duty to the rest of society. Others view it as a way to refuse to support government activities or keep from paying too much in tax. While it might be tempting to see just how much you can avoid paying the IRS, honesty is always the best policy when it comes to your taxes.

Be completely honest with your tax accountant in Los Angeles if you are attempting to find ways to pay less on your taxes. Honesty is not only the best policy, but the least expensive as well.