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Do you know the Difference Between Tax Evasion and Tax Planning?

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1. Tax Evasion

By definition tax evasion means not paying tax you legally owe and therefore is definitely illegal.  Tax evasion is breaking the law.

Most people will agree that tax evasion is morally wrong – if you evade tax you are doing something clearly illegal.

2. Tax Planning

Tax planning on the other hand is perfectly legal.  It is a reduction in tax paid based on strategic planned and actions but into play based on items that have been agreed by the Government and there is nothing wrong in making use of it, that’s what you’re meant to do as long as you use it in the way it was intended.

Tax planning is clearly not immoral, if you are complying with the spirit of the law. For example if you get tax relief on your pension contributions, that money should go to fund yourself in retirement.

 

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Published by IPS Accounting Services & Consulting

I was born in Cuba and came to the US at the age of nine during the 1980 Mariel Exodus. After twenty five years of a successful career in Managerial Accounting for private and corporate sectors. At the age of 45 and empty nester I felt my life needed a bigger purpose. Accounting has been my lifelong journey and I wanted the opportunity to help business reach their optimal growth. In addition to being a devoted mother and wife I’m very involved in my community and volunteer much of my time to advocating for righteous causes. I’m devoted to the women’s movement as well as keeping our Hispanic roots and culture alive.

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