FLF 201 Study Guide - Midterm Guide: Health Insurance Portability And Accountability Act, Intestacy, Community Property
20 Jul 2020
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Tax avoidance = use of legal methods of reducing taxable income or tax owed. Using legitimate tax deductions to minimize business expenses. Set up tax-deferral plans like ira, sep-ira, or 401k to delay taxes to a later date take tax credits; ex) work opportunity tax credit for hiring workers in your business. Tax shields are for protection against higher taxes and a strategy of tax avoidance. Tax loophole = technicality that allows a person or business to avoid the scope of a law or restriction without directly violating the law. Tax evasion = use of illegal methods of concealing income or information from the irs or other tax authority. Not reporting income, reporting more expenses than you can, not paying taxes owed, understanding your tax amount owed. An innocent mistake on your tax return doesn"t automatically turn you into a tax evader intent is a factor.
