Strategic tax planning is essential and a large part of our commitment at Wehring Wealth Management. Ensuring you don’t pay unnecessary taxes and that you take advantage of available benefits is a common theme in everything we do. The line between legal tax avoidance and illegal tax evasion can be a blurry one if you don’t have the right expertise on your side.
In a recent article by U.S. News & World Report, CPA and Financial Advisor Charlene Wehring highlights signs of tax evasion and the importance of clear, consistent reporting.
"People who take cash payments or work under the table, that is tax evasion and that is illegal – even if they did not get a 1099, they are required to report it" says Charlene Wehring, a financial advisor and founder of Wehring Wealth Management in Texas. "The IRS is not dumb. They look at your lifestyle. If you report a little bit of income but you pay your mortgage every year, buy new stuff, drive 16 cars a year, that money is coming from somewhere."
The U.S. income tax system is based on the idea of voluntary compliance, which means it’s your responsibility to report all your income. If you fail to pay what the IRS says you owe, the IRS can hand out penalties and fines, in addition to collecting the back taxes. Tax evasion is illegal, and if you have further questions regarding this topic, our team is happy to help answer.
In contrast, tax avoidance is legal. IRS regulations allow you as an eligible taxpayer to claim certain deductions, credits, and adjustments to income. For example, homeowners can claim a deduction for interest they pay on a home mortgage. Working parents may be able to claim a credit for child-care expenses. These are only a few of the many ways people can legally limit the tax they pay.
When it comes to tax avoidance, there are numerous ways our team can help you reduce your tax bill:
- Popular methods of tax avoidance are opening a tax-advantaged retirement account like a 401(k) or an IRA.
- There’s numerous tax deductions and credits available our team can help to see what you qualify for. 529 education saving plans, charitable donations, child tax credits and more.
Our team at Wehring Wealth Management is here to offer you tax and accounting advice and assistance with handling your returns and assess your deductions.
If you have questions or concerns about tax evasion or avoidance, please schedule time to chat with our team. Contact us via phone or through a questionnaire form on our website: wehringwealthmanagement.com/contact.