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When is skirting taxes legal?

On Behalf of | Feb 22, 2023 | Tax Evasion

During a presidential debate against then-opponent Hillary Clinton, former president Donald Trump famously observed that not paying his full tax liability “makes me smart.” There are certainly times when not paying one’s full tax liability is a savvy approach to financial management and times when not paying one’s full tax liability is a crime.

If you have a substantial tax liability, you may wonder when skirting your full tax burden is savvy and when making this effort could get you into trouble. The long and short of the situation is that if you are taking lawful advantage of credits, deductions and other tax loopholes clearly provided for in the U.S. Tax Code, you’re likely standing on solid ground. If your strategies are not fully supported by compliance with the Tax Code, you’re standing on shaky ground indeed.

Taking informed, proactive approaches is key

By understanding when an action is considered to be tax avoidance versus tax evasion, you can protect your interests, limit your tax liability and avoid tax controversy. You can also feel confident that the IRS will not seek to enforce tax laws in ways that could dramatically affect your life and your finances because you will be in compliance with the law to begin with.

The U.S. Tax Code is both notoriously complex and ever-changing. Avoid assuming that you know everything you need to know about how to skirt taxes lawfully. Instead, consider speaking with a seasoned tax professional about lawful avoidance strategies and when you should pay what you rightfully owe the government. That way, should a tax controversy arise or should you ever be accused of tax evasion, you’ll be able to clearly explain why you’re in the right.