Everybody wants to arrange their taxes so that they are advantageous and maximize their income as much as possible. While this is a natural and smart thing to do, many people accidentally cross the line and engage in practices that the Internal Revenue Service (IRS) considers tax evasion or fraud.
Therefore, as a person that is filing their personal income taxes, it is important that you make sure that you know where the line is drawn and how you can minimize taxes while keeping within the law.
Knowing the difference between tax avoidance and fraud
Avoiding taxes is an act that can be intentional or a genuine mistake. However, you did not commit a crime if you made an innocent mistake and simply passively did not pay certain taxes. In the same light, tax fraud is by definition intentional. Therefore, it involves the attempt to misrepresent facts in some way.
What are some common examples of tax fraud?
Tax fraud can be committed in many different ways, but the common thread is that it is an intentional attempt to gain an unfair financial advantage on taxes. It is often the case that a person decides to underreport their income so they can pay less tax. Tax fraud can also involve concealing assets through transfers or hidden accounts or keeping two IRS accounts in order to avoid taxes.
If you are concerned about what is legal and what is illegal when it comes to filing personal taxes with the IRS, then you should make sure to research the area fully before submitting your tax report.
Source: FindLaw, “Avoiding Behavior the IRS Considers Criminal or Fraudulent,” accessed Feb. 23, 2018