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1. Shard Calculation

Query:

Response:

Calculated Shard: 55 (from laksa112)

2. Crawled Status Check

Query:

curl -X POST \
  'http://laksa055.int.ahrefs:8124/' \
  -H 'Content-Type: text/plain' \
  -H 'X-ClickHouse-Database: crawler3' \
  -H 'Authorization: Basic YXBpOg==' \
  -d 'SELECT getAhrefsURLFromUnparsed(src_unparsed) AS found_url, ifNull(toUnixTimestamp(download_stamp), 0) AS crawl_time, ifNull(toUnixTimestamp(props_url_first_seen), 0) AS first_indexed_time, download_http_code AS http_code, src_unparsed AS src_unparsed, src_root_hash AS src_root_hash, history_drop_reason AS history_drop_reason, meta_title AS meta_title, meta_descriptions AS meta_descriptions, attrs_boilerpipe_text AS attrs_boilerpipe_text, attrs_markdown AS attrs_markdown, attrs_readable_markdown AS attrs_readable_markdown, meta_canonical AS meta_canonical FROM crawler3.page_info_local FINAL PREWHERE (src_root_hash, src_unparsed) IN ((getAhrefsRootHashFromUnparsed(getAhrefsUnparsedNoserviceFromURL(\'https://www.findlaw.com/tax/tax-problems-audits/tax-evasion-vs-tax-avoidance.html\')), getAhrefsUnparsedNoserviceFromURL(\'https://www.findlaw.com/tax/tax-problems-audits/tax-evasion-vs-tax-avoidance.html\'))) FORMAT JSONEachRow'

Response:

{"found_url":"https:\/\/www.findlaw.com\/tax\/tax-problems-audits\/tax-evasion-vs-tax-avoidance.html","crawl_time":1775234302,"first_indexed_time":1607441622,"http_code":200,"src_unparsed":"com,findlaw!www,\/tax\/tax-problems-audits\/tax-evasion-vs-tax-avoidance.html s443","src_root_hash":"16644922069503358655","history_drop_reason":null,"meta_title":"Tax Evasion vs. Tax Avoidance - FindLaw","meta_descriptions":["Tax evasion is illegal, while avoiding taxes by taking advantage of provisions in the tax code is not. FindLaw explains how to legally reduce your tax bill."],"attrs_boilerpipe_text":"By\nFindLaw Staff\n| Legally reviewed by\nJ.P. Finet, J.D.\n| Last reviewed\nSeptember 23, 2023\nThe last updated date refers to the last time this article was reviewed by FindLaw or one of our\ncontributing authors\n. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please\ncontact an attorney in your area\n.\nThere’s nothing wrong with wanting to lower your tax bill. Where you can run into trouble is how you go about doing that. There are lawful ways to minimize tax liabilities and maximize after-tax income. However, not paying or intentionally paying less than the owed taxes is tax evasion, which is illegal.\nUnderstanding the difference between \ntax evasion\n and tax avoidance often isn’t complicated. The following information and examples will explain what activities cross the line. These could result in you facing an \nInternal Revenue Service (IRS) audit\n, tax penalties, or even jail time for tax crimes.\nWhat Is Tax Avoidance?\nWhile tax evasion is illegal, there are steps every taxpayer can take to reduce their tax liability. In fact, there are provisions in the \nfederal tax code\n and state law that encourage these actions to boost behaviors like saving for retirement, buying a home, or \ndonating to charity\n. Reducing your tax liability while complying with tax laws is tax avoidance. Tax avoidance can also include taking advantage of legal loopholes in the tax system to save money.\nMany people pay more state and federal income tax than necessary because they misunderstand tax laws, don’t save for retirement, or fail to keep good records. The most common means of tax avoidance is claiming all your allowed deductions and credits. For example, contributing to a pre-tax retirement fund \nreduces your taxable income\n.\nModern technology also makes it easy to take advantage of tax avoidance strategies. That’s because most tax preparation software products, like TurboTax, include a tax calculator that will analyze your finances and help you find ways to reduce your tax bill legally.\nExamples of Tax Avoidance\nFederal and state tax laws provide for deductions, credits, and adjustments to your income that will lower your tax burden. High-income taxpayers often use tax professionals, such as tax attorneys or CPAs, to help them take full advantage of the legal ways to reduce future tax bills. Tax planning can reduce your taxable income in a given year. It also might lower the tax rate on that income by moving you to a lower tax bracket.\nHere are some common tax avoidance strategies:\nIncreasing Retirement Savings: Putting aside money for your retirement is an effective tax avoidance tool. Employer-sponsored \nretirement plans\n often take money from your pre-tax earnings. If your employer has no plan, you can set up a Roth \nindividual retirement account\n (IRA) that will allow your retirement savings to grow tax-free.\nMaximize Work Deductions: Pay attention to your unreimbursed business expenses. The IRS lets you deduct expenses that are \"ordinary and necessary\" to do your job if your employer does not repay you. That would include things like union dues, unreimbursed mileage, and tools.\nInvest in Your Home: If you use a mortgage to buy your house or a home equity loan to finance improvements, you often can claim a deduction on the interest you pay. Another advantage of investing in your home is that, when you sell it, you will enjoy an exemption from the capital gains tax for the first $250,000 ($500,000 for married couples) in profits.\nFund a Health Savings Account: If you have a high deductible health care plan, consider funding your \nhealth savings account\n (HSA). For 2023, up to $3,850 in contributions for an individual ($7,750 for a family) are deductible and can be used to pay for qualified medical expenses. What you don’t use rolls over to later years.\nWhat Is Tax Evasion?\nTax evasion is the use of illegal means to avoid paying your taxes. Tax evasion occurs when the \ntaxpayer either evades assessment or evades payment\n. This differs from tax fraud, which generally refers to a taxpayer’s attempts to lower their tax bill by falsifying information.\nAn example of evading assessment would be transferring assets to prevent the IRS from determining your actual tax liability. If a taxpayer hides the assets after a tax liability has become due and owing, it is an attempt to evade payment.\nAn honest mistake on your tax return doesn’t qualify as tax evasion. A conviction requires proof that you willfully acted to evade the assessment or payment of your taxes. This \ncrime comes with serious penalties\n, including:\nFines: Tax evaders must pay their original tax liability plus interest, and hefty fines also accompany any conviction. For individuals, a fine of up to $100,000 can be assessed.\nPrison: A conviction for tax evasion could result in being sentenced to up to five years in prison.\nExamples of Tax Evasion\nCourts generally find that taxpayers who participate in one or more of the following have committed tax evasion:\nUnderreporting Income: Taxpayers are always coming up with new ways to hide income from the IRS. But if you intentionally acted to keep the IRS from learning how much you earned, it’s tax evasion. When you file your return, you must provide honest and true earnings statements or face criminal charges.\nTaking Unearned Deductions: This usually occurs when individuals list deductible expenses on their tax forms that they did not incur.\nNot Filing Tax Returns: You can’t hide from the IRS by not filing a return. The IRS receives tax statements from employers and interest statements from financial institutions. If you made money, the IRS likely knows and expects you to file a return.\nDeliberately Underpaying Taxes: Filing your return is only half of your responsibility. You are also required to pay your taxes. Failing to pay can be punished as harshly as if you never filed. If you’re having trouble paying, contact the IRS or state agency to arrange a payment plan.\nClaiming Business Deductions for Personal Expenses: The IRS is on the lookout for small-business owners and self-employed individuals who write off their personal spending as business-related by making the payments from their business bank accounts.\nQuestions on Tax Avoidance vs. Tax Evasion? A Tax Lawyer Can Help\nThe line between tax avoidance and tax evasion can be narrow. Therefore, it’s always best to seek the legal advice of a \nlocal tax attorney\n if you are concerned that your efforts at tax avoidance could be considered illegal by the IRS. Likewise, suppose state or federal tax authorities have already contacted you about an issue with your taxes. In that case, it’s important to have a skilled advocate who understands the laws to protect you.\nWas this helpful?","attrs_markdown":"[Skip to main content](https:\/\/www.findlaw.com\/tax\/tax-problems-audits\/tax-evasion-vs-tax-avoidance.html#main-content)\n\n[Find a Lawyer](https:\/\/lawyers.findlaw.com\/search\/?keyword=Tax&location=Montr%C3%A9al,%20Quebec \"Find a Montréal, Quebec Tax Lawyer\")\n\n- [Find a Lawyer](https:\/\/lawyers.findlaw.com\/search\/?keyword=Tax&location=Montr%C3%A9al,%20Quebec \"Find a Montréal, Quebec Tax Lawyer\")\n- Legal Forms & Services\n  Legal Forms & Services\n  - [Estate Planning](https:\/\/www.findlaw.com\/forms\/estate-planning.html)\n  - [Business Formation](https:\/\/www.findlaw.com\/forms\/business-formation.html)\n  - [View All Legal Forms](https:\/\/www.findlaw.com\/forms.html)\n- Learn About the Law\n  Learn About the Law\n  - Explore Legal Topics\n    - [Accidents & Injuries](https:\/\/www.findlaw.com\/injury.html \"Accidents and injuries law\")\n    - 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(Required)\n\nTax in Montréal, Quebec\n\n### Find a Lawyer\nMore Options\n\n- [Name Search](https:\/\/lawyers.findlaw.com\/name-search\/)\n- [Browse Legal Issues](https:\/\/lawyers.findlaw.com\/legal-issues\/)\n- [Browse Law Firms](https:\/\/lawyers.findlaw.com\/profile\/lawfirm\/a\/1.html)\n- [Support](https:\/\/lawyers.findlaw.com\/lawyer\/help\/)\n\n1. [FindLaw](https:\/\/www.findlaw.com\/)  \/\n2. [Learn About The Law](https:\/\/www.findlaw.com\/law.html)  \/\n3. [Individual Income Tax Law](https:\/\/www.findlaw.com\/tax.html) \/\n4. [Tax Problems and Audits](https:\/\/www.findlaw.com\/tax\/tax-problems-audits.html) \/\n5. Tax Evasion vs. Tax Avoidance\n\n# Tax Evasion vs. Tax Avoidance\nBy [FindLaw Staff](https:\/\/www.findlaw.com\/company\/our-team.html) \\| Legally reviewed by [J.P. Finet, J.D.](https:\/\/www.findlaw.com\/company\/our-team\/j-p-finet-j-d\/) \\| Last reviewed\n\nSeptember 23, 2023\n\n## Legally Reviewed\n*This article has been written and reviewed for legal accuracy, clarity, and style by [FindLaw’s team of legal writers and attorneys](https:\/\/www.findlaw.com\/company\/our-team.html) and in accordance with [our editorial standards](https:\/\/www.findlaw.com\/company\/company-history\/editorial-policy.html).*\n\n## Fact-Checked\n*The last updated date refers to the last time this article was reviewed by FindLaw or one of our [contributing authors](https:\/\/www.findlaw.com\/company\/our-team\/contributing-authors.html). We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please [contact an attorney in your area](https:\/\/lawyers.findlaw.com\/?fli=bylinelink).*\n\nThere’s nothing wrong with wanting to lower your tax bill. Where you can run into trouble is how you go about doing that. There are lawful ways to minimize tax liabilities and maximize after-tax income. However, not paying or intentionally paying less than the owed taxes is tax evasion, which is illegal.\n\nUnderstanding the difference between [tax evasion](https:\/\/www.findlaw.com\/tax\/tax-problems-audits\/what-is-tax-evasion.html) and tax avoidance often isn’t complicated. The following information and examples will explain what activities cross the line. These could result in you facing an [Internal Revenue Service (IRS) audit](https:\/\/www.findlaw.com\/tax\/tax-problems-audits\/what-is-a-tax-audit.html), tax penalties, or even jail time for tax crimes.\n\n## What Is Tax Avoidance?\nWhile tax evasion is illegal, there are steps every taxpayer can take to reduce their tax liability. In fact, there are provisions in the [federal tax code](https:\/\/www.findlaw.com\/tax.html) and state law that encourage these actions to boost behaviors like saving for retirement, buying a home, or [donating to charity](https:\/\/www.findlaw.com\/tax\/federal-taxes\/charitable-contributions.html). Reducing your tax liability while complying with tax laws is tax avoidance. Tax avoidance can also include taking advantage of legal loopholes in the tax system to save money.\n\nMany people pay more state and federal income tax than necessary because they misunderstand tax laws, don’t save for retirement, or fail to keep good records. The most common means of tax avoidance is claiming all your allowed deductions and credits. For example, contributing to a pre-tax retirement fund [reduces your taxable income](https:\/\/www.findlaw.com\/tax\/federal-taxes\/ten-ways-to-lower-your-taxes.html).\n\nModern technology also makes it easy to take advantage of tax avoidance strategies. That’s because most tax preparation software products, like TurboTax, include a tax calculator that will analyze your finances and help you find ways to reduce your tax bill legally.\n\n## Examples of Tax Avoidance\nFederal and state tax laws provide for deductions, credits, and adjustments to your income that will lower your tax burden. High-income taxpayers often use tax professionals, such as tax attorneys or CPAs, to help them take full advantage of the legal ways to reduce future tax bills. Tax planning can reduce your taxable income in a given year. It also might lower the tax rate on that income by moving you to a lower tax bracket.\n\nHere are some common tax avoidance strategies:\n\n- Increasing Retirement Savings: Putting aside money for your retirement is an effective tax avoidance tool. Employer-sponsored [retirement plans](https:\/\/www.findlaw.com\/socialsecurity\/retirement-planning\/how-to-plan-for-retirement-faq.html) often take money from your pre-tax earnings. If your employer has no plan, you can set up a Roth [individual retirement account](https:\/\/dictionary.findlaw.com\/definition\/individual-retirement-account-ira-.html) (IRA) that will allow your retirement savings to grow tax-free.\n- Maximize Work Deductions: Pay attention to your unreimbursed business expenses. The IRS lets you deduct expenses that are \"ordinary and necessary\" to do your job if your employer does not repay you. That would include things like union dues, unreimbursed mileage, and tools.\n- Invest in Your Home: If you use a mortgage to buy your house or a home equity loan to finance improvements, you often can claim a deduction on the interest you pay. Another advantage of investing in your home is that, when you sell it, you will enjoy an exemption from the capital gains tax for the first \\$250,000 (\\$500,000 for married couples) in profits.\n- Fund a Health Savings Account: If you have a high deductible health care plan, consider funding your [health savings account](https:\/\/www.findlaw.com\/healthcare\/patient-rights\/what-is-a-health-savings-account.html) (HSA). For 2023, up to \\$3,850 in contributions for an individual (\\$7,750 for a family) are deductible and can be used to pay for qualified medical expenses. What you don’t use rolls over to later years.\n## What Is Tax Evasion?\nTax evasion is the use of illegal means to avoid paying your taxes. Tax evasion occurs when the [taxpayer either evades assessment or evades payment](https:\/\/www.findlaw.com\/criminal\/criminal-charges\/tax-evasion.html). This differs from tax fraud, which generally refers to a taxpayer’s attempts to lower their tax bill by falsifying information.\n\nAn example of evading assessment would be transferring assets to prevent the IRS from determining your actual tax liability. If a taxpayer hides the assets after a tax liability has become due and owing, it is an attempt to evade payment.\n\nAn honest mistake on your tax return doesn’t qualify as tax evasion. A conviction requires proof that you willfully acted to evade the assessment or payment of your taxes. This [crime comes with serious penalties](https:\/\/www.findlaw.com\/tax\/tax-problems-audits\/income-tax-fraud-vs-negligence.html), including:\n\n- Fines: Tax evaders must pay their original tax liability plus interest, and hefty fines also accompany any conviction. For individuals, a fine of up to \\$100,000 can be assessed.\n- Prison: A conviction for tax evasion could result in being sentenced to up to five years in prison.\n## Examples of Tax Evasion\nCourts generally find that taxpayers who participate in one or more of the following have committed tax evasion:\n\n- Underreporting Income: Taxpayers are always coming up with new ways to hide income from the IRS. But if you intentionally acted to keep the IRS from learning how much you earned, it’s tax evasion. When you file your return, you must provide honest and true earnings statements or face criminal charges.\n- Taking Unearned Deductions: This usually occurs when individuals list deductible expenses on their tax forms that they did not incur.\n- Not Filing Tax Returns: You can’t hide from the IRS by not filing a return. The IRS receives tax statements from employers and interest statements from financial institutions. If you made money, the IRS likely knows and expects you to file a return.\n- Deliberately Underpaying Taxes: Filing your return is only half of your responsibility. You are also required to pay your taxes. Failing to pay can be punished as harshly as if you never filed. If you’re having trouble paying, contact the IRS or state agency to arrange a payment plan.\n- Claiming Business Deductions for Personal Expenses: The IRS is on the lookout for small-business owners and self-employed individuals who write off their personal spending as business-related by making the payments from their business bank accounts.\n## Questions on Tax Avoidance vs. Tax Evasion? A Tax Lawyer Can Help\nThe line between tax avoidance and tax evasion can be narrow. Therefore, it’s always best to seek the legal advice of a [local tax attorney](https:\/\/lawyers.findlaw.com\/taxation-law\/?fli=dcta) if you are concerned that your efforts at tax avoidance could be considered illegal by the IRS. Likewise, suppose state or federal tax authorities have already contacted you about an issue with your taxes. In that case, it’s important to have a skilled advocate who understands the laws to protect you.\n\nWas this helpful?\n\nYes\n\nNo\n\n## Can I Solve This on My Own or Do I Need an Attorney?\n- You may need a certified public accountant (CPA), enrolled agent (EA), or a tax attorney for your tax issues or IRS concerns\n- Complex tax cases (such as back taxes, criminal tax matters, tax litigation, or serious issues with the IRS) may need the support of an attorney\n\nTax issues and IRS matters can be challenging. A tax attorney has advanced training to offer tailored advice to resolve complicated tax situations.\n\n[Find a local attorney](https:\/\/lawyers.findlaw.com\/taxation-law\/quebec\/montr%C3%A9al\/?fli=esum:FL47 \"Tax Law Attorney Directory\")\n\n### Stay Up-to-Date With How the Law Affects Your Life\n![](https:\/\/www.findlaw.com\/static\/c\/images\/images\/w_1200,c_limit,dpr_auto\/f_auto,q_auto:eco\/v1745902396\/ability-law\/wp-prod\/general-components-subscribe-module-Image-subscribeModule_1\/general-components-subscribe-module-Image-subscribeModule_1.png?_i=AA)\n\n#### Enter your email address to subscribe\n[Learn more about FindLaw’s newsletters](https:\/\/newsletters.findlaw.com\/), including our terms of use and privacy policy.\n\n### Helpful Links\n- [Federal Taxes](https:\/\/www.findlaw.com\/tax\/federal-taxes.html)\n- [Tax Laws and Forms](https:\/\/www.findlaw.com\/tax\/tax-laws-forms.html)\n- [Tax Problems and Audits](https:\/\/www.findlaw.com\/tax\/tax-problems-audits.html)\n\n### Attorney Directory\n- [Tax Increment Financing Attorney](https:\/\/lawyers.findlaw.com\/tax-increment-financing\/?fli=dcta)\n- [Tax Law Attorney](https:\/\/lawyers.findlaw.com\/taxation-law\/?fli=dcta)\n\n## You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help\nMeeting with a lawyer can help you understand your options and how to best protect your rights. Visit our [attorney directory](https:\/\/lawyers.findlaw.com\/) to find a lawyer near you who can help.\n\nOr contact an attorney near you:\n\nSPONSORED\n\n## Next Steps\nContact a qualified tax attorney to help you navigate your federal and\/or state tax issues.\n\nEnter information. (Required)\n\n## Find Help for These Areas:\n- [Filing Taxes](https:\/\/www.findlaw.com\/tax\/federal-taxes\/filing-taxes.html?fli=diyns&fli=dcta \"Filing Taxes\")\n- [Paying Taxes](https:\/\/www.findlaw.com\/tax\/federal-taxes\/paying-taxes.html?fli=diyns&fli=dcta \"Paying Taxes\")\n- [IRS Audits](https:\/\/www.findlaw.com\/tax\/tax-problems-audits\/irs-audits.html?fli=diyns&fli=dcta \"IRS Audits\")\n\nCopied to clipboard\n\n[Back to Top](https:\/\/www.findlaw.com\/tax\/tax-problems-audits\/tax-evasion-vs-tax-avoidance.html)\n\n![](https:\/\/www.findlaw.com\/static\/c\/images\/image\/upload\/c_crop,w_229,h_50\/v1725999921\/resources\/flfe\/FindLaw_rgb_158_3.png)\n\nQuestions?\n\nAt FindLaw.com, we pride ourselves on being the number one source of free legal information and resources on the web. [Contact us.](https:\/\/www.findlaw.com\/company\/contact-us\/contacts.html)\n\nStay up-to-date with how the law affects your life.\n\nSign up for our consumer newsletter.\n\nFOLLOW US:\n\n[ABOUT US](https:\/\/www.findlaw.com\/company.html)\n\n- [Our Team](https:\/\/www.findlaw.com\/company\/our-team.html)\n- [Accessibility](https:\/\/www.findlaw.com\/company\/our-commitment-to-accessibility.html)\n- [Contact Us](https:\/\/www.findlaw.com\/company\/contact-us\/contacts.html)\n\n[FIND A LAWYER](https:\/\/lawyers.findlaw.com\/)\n\n- [By Location](https:\/\/lawyers.findlaw.com\/#browse-location)\n- [By Legal Issue](https:\/\/lawyers.findlaw.com\/legal-issues\/)\n- [By Lawyer Profiles](https:\/\/lawyers.findlaw.com\/profile\/lawyer\/a\/1.html)\n- [By Name](https:\/\/lawyers.findlaw.com\/name-search\/)\n\nSELF-HELP RESOURCES\n\n- [Legal Forms & Services](https:\/\/www.findlaw.com\/forms.html)\n\nLEGAL RESEARCH\n\n- [Learn About the Law](https:\/\/www.findlaw.com\/law.html)\n- [State Laws](https:\/\/www.findlaw.com\/state.html)\n- [U.S. Caselaw](https:\/\/caselaw.findlaw.com\/)\n- [U.S. Codes](https:\/\/codes.findlaw.com\/)\n\nLEGAL NETWORK\n\n[FindLaw.com](https:\/\/www.findlaw.com\/) Free, trusted legal information for consumers and legal professionals\n\n[SuperLawyers.com](https:\/\/www.superlawyers.com\/) Directory of U.S. attorneys with the exclusive Super Lawyers rating\n\n[Abogado.com](https:\/\/www.abogado.com\/) The \\#1 Spanish-language legal website for consumers\n\n[LawInfo.com](https:\/\/www.lawinfo.com\/) Nationwide attorney directory and legal consumer resources\n\nCopyright © 2026, FindLaw. All rights reserved.\n\n[Terms](https:\/\/www.findlaw.com\/company\/findlaw-terms-of-service.html)   [Privacy](https:\/\/www.findlaw.com\/company\/privacy\/privacy-statement.html)   [Disclaimer](https:\/\/www.findlaw.com\/company\/disclaimer.html)   [Cookies](https:\/\/www.internetbrands.com\/privacy\/cookie-policy)  [Manage Preferences](https:\/\/www.findlaw.com\/tax\/tax-problems-audits\/tax-evasion-vs-tax-avoidance.html)","attrs_readable_markdown":"By [FindLaw Staff](https:\/\/www.findlaw.com\/company\/our-team.html) \\| Legally reviewed by [J.P. Finet, J.D.](https:\/\/www.findlaw.com\/company\/our-team\/j-p-finet-j-d\/) \\| Last reviewed September 23, 2023\n\n##\n*The last updated date refers to the last time this article was reviewed by FindLaw or one of our [contributing authors](https:\/\/www.findlaw.com\/company\/our-team\/contributing-authors.html). We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please [contact an attorney in your area](https:\/\/lawyers.findlaw.com\/?fli=bylinelink).*\n\nThere’s nothing wrong with wanting to lower your tax bill. Where you can run into trouble is how you go about doing that. There are lawful ways to minimize tax liabilities and maximize after-tax income. However, not paying or intentionally paying less than the owed taxes is tax evasion, which is illegal.\n\nUnderstanding the difference between [tax evasion](https:\/\/www.findlaw.com\/tax\/tax-problems-audits\/what-is-tax-evasion.html) and tax avoidance often isn’t complicated. The following information and examples will explain what activities cross the line. These could result in you facing an [Internal Revenue Service (IRS) audit](https:\/\/www.findlaw.com\/tax\/tax-problems-audits\/what-is-a-tax-audit.html), tax penalties, or even jail time for tax crimes.\n\n## What Is Tax Avoidance?\nWhile tax evasion is illegal, there are steps every taxpayer can take to reduce their tax liability. In fact, there are provisions in the [federal tax code](https:\/\/www.findlaw.com\/tax.html) and state law that encourage these actions to boost behaviors like saving for retirement, buying a home, or [donating to charity](https:\/\/www.findlaw.com\/tax\/federal-taxes\/charitable-contributions.html). Reducing your tax liability while complying with tax laws is tax avoidance. Tax avoidance can also include taking advantage of legal loopholes in the tax system to save money.\n\nMany people pay more state and federal income tax than necessary because they misunderstand tax laws, don’t save for retirement, or fail to keep good records. The most common means of tax avoidance is claiming all your allowed deductions and credits. For example, contributing to a pre-tax retirement fund [reduces your taxable income](https:\/\/www.findlaw.com\/tax\/federal-taxes\/ten-ways-to-lower-your-taxes.html).\n\nModern technology also makes it easy to take advantage of tax avoidance strategies. That’s because most tax preparation software products, like TurboTax, include a tax calculator that will analyze your finances and help you find ways to reduce your tax bill legally.\n\n## Examples of Tax Avoidance\nFederal and state tax laws provide for deductions, credits, and adjustments to your income that will lower your tax burden. High-income taxpayers often use tax professionals, such as tax attorneys or CPAs, to help them take full advantage of the legal ways to reduce future tax bills. Tax planning can reduce your taxable income in a given year. It also might lower the tax rate on that income by moving you to a lower tax bracket.\n\nHere are some common tax avoidance strategies:\n\n- Increasing Retirement Savings: Putting aside money for your retirement is an effective tax avoidance tool. Employer-sponsored [retirement plans](https:\/\/www.findlaw.com\/socialsecurity\/retirement-planning\/how-to-plan-for-retirement-faq.html) often take money from your pre-tax earnings. If your employer has no plan, you can set up a Roth [individual retirement account](https:\/\/dictionary.findlaw.com\/definition\/individual-retirement-account-ira-.html) (IRA) that will allow your retirement savings to grow tax-free.\n- Maximize Work Deductions: Pay attention to your unreimbursed business expenses. The IRS lets you deduct expenses that are \"ordinary and necessary\" to do your job if your employer does not repay you. That would include things like union dues, unreimbursed mileage, and tools.\n- Invest in Your Home: If you use a mortgage to buy your house or a home equity loan to finance improvements, you often can claim a deduction on the interest you pay. Another advantage of investing in your home is that, when you sell it, you will enjoy an exemption from the capital gains tax for the first \\$250,000 (\\$500,000 for married couples) in profits.\n- Fund a Health Savings Account: If you have a high deductible health care plan, consider funding your [health savings account](https:\/\/www.findlaw.com\/healthcare\/patient-rights\/what-is-a-health-savings-account.html) (HSA). For 2023, up to \\$3,850 in contributions for an individual (\\$7,750 for a family) are deductible and can be used to pay for qualified medical expenses. What you don’t use rolls over to later years.\n## What Is Tax Evasion?\nTax evasion is the use of illegal means to avoid paying your taxes. Tax evasion occurs when the [taxpayer either evades assessment or evades payment](https:\/\/www.findlaw.com\/criminal\/criminal-charges\/tax-evasion.html). This differs from tax fraud, which generally refers to a taxpayer’s attempts to lower their tax bill by falsifying information.\n\nAn example of evading assessment would be transferring assets to prevent the IRS from determining your actual tax liability. If a taxpayer hides the assets after a tax liability has become due and owing, it is an attempt to evade payment.\n\nAn honest mistake on your tax return doesn’t qualify as tax evasion. A conviction requires proof that you willfully acted to evade the assessment or payment of your taxes. This [crime comes with serious penalties](https:\/\/www.findlaw.com\/tax\/tax-problems-audits\/income-tax-fraud-vs-negligence.html), including:\n\n- Fines: Tax evaders must pay their original tax liability plus interest, and hefty fines also accompany any conviction. For individuals, a fine of up to \\$100,000 can be assessed.\n- Prison: A conviction for tax evasion could result in being sentenced to up to five years in prison.\n## Examples of Tax Evasion\nCourts generally find that taxpayers who participate in one or more of the following have committed tax evasion:\n\n- Underreporting Income: Taxpayers are always coming up with new ways to hide income from the IRS. But if you intentionally acted to keep the IRS from learning how much you earned, it’s tax evasion. When you file your return, you must provide honest and true earnings statements or face criminal charges.\n- Taking Unearned Deductions: This usually occurs when individuals list deductible expenses on their tax forms that they did not incur.\n- Not Filing Tax Returns: You can’t hide from the IRS by not filing a return. The IRS receives tax statements from employers and interest statements from financial institutions. If you made money, the IRS likely knows and expects you to file a return.\n- Deliberately Underpaying Taxes: Filing your return is only half of your responsibility. You are also required to pay your taxes. Failing to pay can be punished as harshly as if you never filed. If you’re having trouble paying, contact the IRS or state agency to arrange a payment plan.\n- Claiming Business Deductions for Personal Expenses: The IRS is on the lookout for small-business owners and self-employed individuals who write off their personal spending as business-related by making the payments from their business bank accounts.\n## Questions on Tax Avoidance vs. Tax Evasion? A Tax Lawyer Can Help\nThe line between tax avoidance and tax evasion can be narrow. Therefore, it’s always best to seek the legal advice of a [local tax attorney](https:\/\/lawyers.findlaw.com\/taxation-law\/?fli=dcta) if you are concerned that your efforts at tax avoidance could be considered illegal by the IRS. Likewise, suppose state or federal tax authorities have already contacted you about an issue with your taxes. In that case, it’s important to have a skilled advocate who understands the laws to protect you.\n\nWas this helpful?","meta_canonical":null}

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Boilerpipe Text	By FindLaw Staff \| Legally reviewed by J.P. Finet, J.D. \| Last reviewed September 23, 2023 The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors . We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area . There’s nothing wrong with wanting to lower your tax bill. Where you can run into trouble is how you go about doing that. There are lawful ways to minimize tax liabilities and maximize after-tax income. However, not paying or intentionally paying less than the owed taxes is tax evasion, which is illegal. Understanding the difference between tax evasion and tax avoidance often isn’t complicated. The following information and examples will explain what activities cross the line. These could result in you facing an Internal Revenue Service (IRS) audit , tax penalties, or even jail time for tax crimes. What Is Tax Avoidance? While tax evasion is illegal, there are steps every taxpayer can take to reduce their tax liability. In fact, there are provisions in the federal tax code and state law that encourage these actions to boost behaviors like saving for retirement, buying a home, or donating to charity . Reducing your tax liability while complying with tax laws is tax avoidance. Tax avoidance can also include taking advantage of legal loopholes in the tax system to save money. Many people pay more state and federal income tax than necessary because they misunderstand tax laws, don’t save for retirement, or fail to keep good records. The most common means of tax avoidance is claiming all your allowed deductions and credits. For example, contributing to a pre-tax retirement fund reduces your taxable income . Modern technology also makes it easy to take advantage of tax avoidance strategies. That’s because most tax preparation software products, like TurboTax, include a tax calculator that will analyze your finances and help you find ways to reduce your tax bill legally. Examples of Tax Avoidance Federal and state tax laws provide for deductions, credits, and adjustments to your income that will lower your tax burden. High-income taxpayers often use tax professionals, such as tax attorneys or CPAs, to help them take full advantage of the legal ways to reduce future tax bills. Tax planning can reduce your taxable income in a given year. It also might lower the tax rate on that income by moving you to a lower tax bracket. Here are some common tax avoidance strategies: Increasing Retirement Savings: Putting aside money for your retirement is an effective tax avoidance tool. Employer-sponsored retirement plans often take money from your pre-tax earnings. If your employer has no plan, you can set up a Roth individual retirement account (IRA) that will allow your retirement savings to grow tax-free. Maximize Work Deductions: Pay attention to your unreimbursed business expenses. The IRS lets you deduct expenses that are "ordinary and necessary" to do your job if your employer does not repay you. That would include things like union dues, unreimbursed mileage, and tools. Invest in Your Home: If you use a mortgage to buy your house or a home equity loan to finance improvements, you often can claim a deduction on the interest you pay. Another advantage of investing in your home is that, when you sell it, you will enjoy an exemption from the capital gains tax for the first $250,000 ($500,000 for married couples) in profits. Fund a Health Savings Account: If you have a high deductible health care plan, consider funding your health savings account (HSA). For 2023, up to $3,850 in contributions for an individual ($7,750 for a family) are deductible and can be used to pay for qualified medical expenses. What you don’t use rolls over to later years. What Is Tax Evasion? Tax evasion is the use of illegal means to avoid paying your taxes. Tax evasion occurs when the taxpayer either evades assessment or evades payment . This differs from tax fraud, which generally refers to a taxpayer’s attempts to lower their tax bill by falsifying information. An example of evading assessment would be transferring assets to prevent the IRS from determining your actual tax liability. If a taxpayer hides the assets after a tax liability has become due and owing, it is an attempt to evade payment. An honest mistake on your tax return doesn’t qualify as tax evasion. A conviction requires proof that you willfully acted to evade the assessment or payment of your taxes. This crime comes with serious penalties , including: Fines: Tax evaders must pay their original tax liability plus interest, and hefty fines also accompany any conviction. For individuals, a fine of up to $100,000 can be assessed. Prison: A conviction for tax evasion could result in being sentenced to up to five years in prison. Examples of Tax Evasion Courts generally find that taxpayers who participate in one or more of the following have committed tax evasion: Underreporting Income: Taxpayers are always coming up with new ways to hide income from the IRS. But if you intentionally acted to keep the IRS from learning how much you earned, it’s tax evasion. When you file your return, you must provide honest and true earnings statements or face criminal charges. Taking Unearned Deductions: This usually occurs when individuals list deductible expenses on their tax forms that they did not incur. Not Filing Tax Returns: You can’t hide from the IRS by not filing a return. The IRS receives tax statements from employers and interest statements from financial institutions. If you made money, the IRS likely knows and expects you to file a return. Deliberately Underpaying Taxes: Filing your return is only half of your responsibility. You are also required to pay your taxes. Failing to pay can be punished as harshly as if you never filed. If you’re having trouble paying, contact the IRS or state agency to arrange a payment plan. Claiming Business Deductions for Personal Expenses: The IRS is on the lookout for small-business owners and self-employed individuals who write off their personal spending as business-related by making the payments from their business bank accounts. Questions on Tax Avoidance vs. Tax Evasion? A Tax Lawyer Can Help The line between tax avoidance and tax evasion can be narrow. Therefore, it’s always best to seek the legal advice of a local tax attorney if you are concerned that your efforts at tax avoidance could be considered illegal by the IRS. Likewise, suppose state or federal tax authorities have already contacted you about an issue with your taxes. In that case, it’s important to have a skilled advocate who understands the laws to protect you. Was this helpful?
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(Required) Tax in Montréal, Quebec ### Find a Lawyer More Options - [Name Search](https://lawyers.findlaw.com/name-search/) - [Browse Legal Issues](https://lawyers.findlaw.com/legal-issues/) - [Browse Law Firms](https://lawyers.findlaw.com/profile/lawfirm/a/1.html) - [Support](https://lawyers.findlaw.com/lawyer/help/) 1. [FindLaw](https://www.findlaw.com/) / 2. [Learn About The Law](https://www.findlaw.com/law.html) / 3. [Individual Income Tax Law](https://www.findlaw.com/tax.html) / 4. [Tax Problems and Audits](https://www.findlaw.com/tax/tax-problems-audits.html) / 5. Tax Evasion vs. Tax Avoidance # Tax Evasion vs. Tax Avoidance By [FindLaw Staff](https://www.findlaw.com/company/our-team.html) \\| Legally reviewed by [J.P. Finet, J.D.](https://www.findlaw.com/company/our-team/j-p-finet-j-d/) \\| Last reviewed September 23, 2023 ## Legally Reviewed This article has been written and reviewed for legal accuracy, clarity, and style by [FindLaw’s team of legal writers and attorneys](https://www.findlaw.com/company/our-team.html) and in accordance with [our editorial standards](https://www.findlaw.com/company/company-history/editorial-policy.html). ## Fact-Checked The last updated date refers to the last time this article was reviewed by FindLaw or one of our [contributing authors](https://www.findlaw.com/company/our-team/contributing-authors.html). We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please [contact an attorney in your area](https://lawyers.findlaw.com/?fli=bylinelink). There’s nothing wrong with wanting to lower your tax bill. Where you can run into trouble is how you go about doing that. There are lawful ways to minimize tax liabilities and maximize after-tax income. However, not paying or intentionally paying less than the owed taxes is tax evasion, which is illegal. Understanding the difference between [tax evasion](https://www.findlaw.com/tax/tax-problems-audits/what-is-tax-evasion.html) and tax avoidance often isn’t complicated. The following information and examples will explain what activities cross the line. These could result in you facing an [Internal Revenue Service (IRS) audit](https://www.findlaw.com/tax/tax-problems-audits/what-is-a-tax-audit.html), tax penalties, or even jail time for tax crimes. ## What Is Tax Avoidance? While tax evasion is illegal, there are steps every taxpayer can take to reduce their tax liability. In fact, there are provisions in the [federal tax code](https://www.findlaw.com/tax.html) and state law that encourage these actions to boost behaviors like saving for retirement, buying a home, or [donating to charity](https://www.findlaw.com/tax/federal-taxes/charitable-contributions.html). Reducing your tax liability while complying with tax laws is tax avoidance. Tax avoidance can also include taking advantage of legal loopholes in the tax system to save money. Many people pay more state and federal income tax than necessary because they misunderstand tax laws, don’t save for retirement, or fail to keep good records. The most common means of tax avoidance is claiming all your allowed deductions and credits. For example, contributing to a pre-tax retirement fund [reduces your taxable income](https://www.findlaw.com/tax/federal-taxes/ten-ways-to-lower-your-taxes.html). Modern technology also makes it easy to take advantage of tax avoidance strategies. That’s because most tax preparation software products, like TurboTax, include a tax calculator that will analyze your finances and help you find ways to reduce your tax bill legally. ## Examples of Tax Avoidance Federal and state tax laws provide for deductions, credits, and adjustments to your income that will lower your tax burden. High-income taxpayers often use tax professionals, such as tax attorneys or CPAs, to help them take full advantage of the legal ways to reduce future tax bills. Tax planning can reduce your taxable income in a given year. It also might lower the tax rate on that income by moving you to a lower tax bracket. Here are some common tax avoidance strategies: - Increasing Retirement Savings: Putting aside money for your retirement is an effective tax avoidance tool. Employer-sponsored [retirement plans](https://www.findlaw.com/socialsecurity/retirement-planning/how-to-plan-for-retirement-faq.html) often take money from your pre-tax earnings. If your employer has no plan, you can set up a Roth [individual retirement account](https://dictionary.findlaw.com/definition/individual-retirement-account-ira-.html) (IRA) that will allow your retirement savings to grow tax-free. - Maximize Work Deductions: Pay attention to your unreimbursed business expenses. The IRS lets you deduct expenses that are "ordinary and necessary" to do your job if your employer does not repay you. That would include things like union dues, unreimbursed mileage, and tools. - Invest in Your Home: If you use a mortgage to buy your house or a home equity loan to finance improvements, you often can claim a deduction on the interest you pay. Another advantage of investing in your home is that, when you sell it, you will enjoy an exemption from the capital gains tax for the first \$250,000 (\$500,000 for married couples) in profits. - Fund a Health Savings Account: If you have a high deductible health care plan, consider funding your [health savings account](https://www.findlaw.com/healthcare/patient-rights/what-is-a-health-savings-account.html) (HSA). For 2023, up to \$3,850 in contributions for an individual (\$7,750 for a family) are deductible and can be used to pay for qualified medical expenses. What you don’t use rolls over to later years. ## What Is Tax Evasion? Tax evasion is the use of illegal means to avoid paying your taxes. Tax evasion occurs when the [taxpayer either evades assessment or evades payment](https://www.findlaw.com/criminal/criminal-charges/tax-evasion.html). This differs from tax fraud, which generally refers to a taxpayer’s attempts to lower their tax bill by falsifying information. An example of evading assessment would be transferring assets to prevent the IRS from determining your actual tax liability. If a taxpayer hides the assets after a tax liability has become due and owing, it is an attempt to evade payment. An honest mistake on your tax return doesn’t qualify as tax evasion. A conviction requires proof that you willfully acted to evade the assessment or payment of your taxes. This [crime comes with serious penalties](https://www.findlaw.com/tax/tax-problems-audits/income-tax-fraud-vs-negligence.html), including: - Fines: Tax evaders must pay their original tax liability plus interest, and hefty fines also accompany any conviction. For individuals, a fine of up to \$100,000 can be assessed. - Prison: A conviction for tax evasion could result in being sentenced to up to five years in prison. ## Examples of Tax Evasion Courts generally find that taxpayers who participate in one or more of the following have committed tax evasion: - Underreporting Income: Taxpayers are always coming up with new ways to hide income from the IRS. But if you intentionally acted to keep the IRS from learning how much you earned, it’s tax evasion. When you file your return, you must provide honest and true earnings statements or face criminal charges. - Taking Unearned Deductions: This usually occurs when individuals list deductible expenses on their tax forms that they did not incur. - Not Filing Tax Returns: You can’t hide from the IRS by not filing a return. The IRS receives tax statements from employers and interest statements from financial institutions. If you made money, the IRS likely knows and expects you to file a return. - Deliberately Underpaying Taxes: Filing your return is only half of your responsibility. You are also required to pay your taxes. Failing to pay can be punished as harshly as if you never filed. If you’re having trouble paying, contact the IRS or state agency to arrange a payment plan. - Claiming Business Deductions for Personal Expenses: The IRS is on the lookout for small-business owners and self-employed individuals who write off their personal spending as business-related by making the payments from their business bank accounts. ## Questions on Tax Avoidance vs. Tax Evasion? A Tax Lawyer Can Help The line between tax avoidance and tax evasion can be narrow. Therefore, it’s always best to seek the legal advice of a [local tax attorney](https://lawyers.findlaw.com/taxation-law/?fli=dcta) if you are concerned that your efforts at tax avoidance could be considered illegal by the IRS. Likewise, suppose state or federal tax authorities have already contacted you about an issue with your taxes. In that case, it’s important to have a skilled advocate who understands the laws to protect you. Was this helpful? Yes No ## Can I Solve This on My Own or Do I Need an Attorney? - You may need a certified public accountant (CPA), enrolled agent (EA), or a tax attorney for your tax issues or IRS concerns - Complex tax cases (such as back taxes, criminal tax matters, tax litigation, or serious issues with the IRS) may need the support of an attorney Tax issues and IRS matters can be challenging. A tax attorney has advanced training to offer tailored advice to resolve complicated tax situations. 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Visit our [attorney directory](https://lawyers.findlaw.com/) to find a lawyer near you who can help. Or contact an attorney near you: SPONSORED ## Next Steps Contact a qualified tax attorney to help you navigate your federal and/or state tax issues. Enter information. (Required) ## Find Help for These Areas: - [Filing Taxes](https://www.findlaw.com/tax/federal-taxes/filing-taxes.html?fli=diyns&fli=dcta "Filing Taxes") - [Paying Taxes](https://www.findlaw.com/tax/federal-taxes/paying-taxes.html?fli=diyns&fli=dcta "Paying Taxes") - [IRS Audits](https://www.findlaw.com/tax/tax-problems-audits/irs-audits.html?fli=diyns&fli=dcta "IRS Audits") Copied to clipboard [Back to Top](https://www.findlaw.com/tax/tax-problems-audits/tax-evasion-vs-tax-avoidance.html) ![](https://www.findlaw.com/static/c/images/image/upload/c_crop,w_229,h_50/v1725999921/resources/flfe/FindLaw_rgb_158_3.png) Questions? 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Readable Markdown	By [FindLaw Staff](https://www.findlaw.com/company/our-team.html) \\| Legally reviewed by [J.P. Finet, J.D.](https://www.findlaw.com/company/our-team/j-p-finet-j-d/) \\| Last reviewed September 23, 2023 ## The last updated date refers to the last time this article was reviewed by FindLaw or one of our [contributing authors](https://www.findlaw.com/company/our-team/contributing-authors.html). We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please [contact an attorney in your area](https://lawyers.findlaw.com/?fli=bylinelink). There’s nothing wrong with wanting to lower your tax bill. Where you can run into trouble is how you go about doing that. There are lawful ways to minimize tax liabilities and maximize after-tax income. However, not paying or intentionally paying less than the owed taxes is tax evasion, which is illegal. Understanding the difference between [tax evasion](https://www.findlaw.com/tax/tax-problems-audits/what-is-tax-evasion.html) and tax avoidance often isn’t complicated. The following information and examples will explain what activities cross the line. These could result in you facing an [Internal Revenue Service (IRS) audit](https://www.findlaw.com/tax/tax-problems-audits/what-is-a-tax-audit.html), tax penalties, or even jail time for tax crimes. ## What Is Tax Avoidance? While tax evasion is illegal, there are steps every taxpayer can take to reduce their tax liability. In fact, there are provisions in the [federal tax code](https://www.findlaw.com/tax.html) and state law that encourage these actions to boost behaviors like saving for retirement, buying a home, or [donating to charity](https://www.findlaw.com/tax/federal-taxes/charitable-contributions.html). Reducing your tax liability while complying with tax laws is tax avoidance. Tax avoidance can also include taking advantage of legal loopholes in the tax system to save money. Many people pay more state and federal income tax than necessary because they misunderstand tax laws, don’t save for retirement, or fail to keep good records. The most common means of tax avoidance is claiming all your allowed deductions and credits. For example, contributing to a pre-tax retirement fund [reduces your taxable income](https://www.findlaw.com/tax/federal-taxes/ten-ways-to-lower-your-taxes.html). Modern technology also makes it easy to take advantage of tax avoidance strategies. That’s because most tax preparation software products, like TurboTax, include a tax calculator that will analyze your finances and help you find ways to reduce your tax bill legally. ## Examples of Tax Avoidance Federal and state tax laws provide for deductions, credits, and adjustments to your income that will lower your tax burden. High-income taxpayers often use tax professionals, such as tax attorneys or CPAs, to help them take full advantage of the legal ways to reduce future tax bills. Tax planning can reduce your taxable income in a given year. It also might lower the tax rate on that income by moving you to a lower tax bracket. Here are some common tax avoidance strategies: - Increasing Retirement Savings: Putting aside money for your retirement is an effective tax avoidance tool. Employer-sponsored [retirement plans](https://www.findlaw.com/socialsecurity/retirement-planning/how-to-plan-for-retirement-faq.html) often take money from your pre-tax earnings. If your employer has no plan, you can set up a Roth [individual retirement account](https://dictionary.findlaw.com/definition/individual-retirement-account-ira-.html) (IRA) that will allow your retirement savings to grow tax-free. - Maximize Work Deductions: Pay attention to your unreimbursed business expenses. The IRS lets you deduct expenses that are "ordinary and necessary" to do your job if your employer does not repay you. That would include things like union dues, unreimbursed mileage, and tools. - Invest in Your Home: If you use a mortgage to buy your house or a home equity loan to finance improvements, you often can claim a deduction on the interest you pay. Another advantage of investing in your home is that, when you sell it, you will enjoy an exemption from the capital gains tax for the first \$250,000 (\$500,000 for married couples) in profits. - Fund a Health Savings Account: If you have a high deductible health care plan, consider funding your [health savings account](https://www.findlaw.com/healthcare/patient-rights/what-is-a-health-savings-account.html) (HSA). For 2023, up to \$3,850 in contributions for an individual (\$7,750 for a family) are deductible and can be used to pay for qualified medical expenses. What you don’t use rolls over to later years. ## What Is Tax Evasion? Tax evasion is the use of illegal means to avoid paying your taxes. Tax evasion occurs when the [taxpayer either evades assessment or evades payment](https://www.findlaw.com/criminal/criminal-charges/tax-evasion.html). This differs from tax fraud, which generally refers to a taxpayer’s attempts to lower their tax bill by falsifying information. An example of evading assessment would be transferring assets to prevent the IRS from determining your actual tax liability. If a taxpayer hides the assets after a tax liability has become due and owing, it is an attempt to evade payment. An honest mistake on your tax return doesn’t qualify as tax evasion. A conviction requires proof that you willfully acted to evade the assessment or payment of your taxes. This [crime comes with serious penalties](https://www.findlaw.com/tax/tax-problems-audits/income-tax-fraud-vs-negligence.html), including: - Fines: Tax evaders must pay their original tax liability plus interest, and hefty fines also accompany any conviction. For individuals, a fine of up to \$100,000 can be assessed. - Prison: A conviction for tax evasion could result in being sentenced to up to five years in prison. ## Examples of Tax Evasion Courts generally find that taxpayers who participate in one or more of the following have committed tax evasion: - Underreporting Income: Taxpayers are always coming up with new ways to hide income from the IRS. But if you intentionally acted to keep the IRS from learning how much you earned, it’s tax evasion. When you file your return, you must provide honest and true earnings statements or face criminal charges. - Taking Unearned Deductions: This usually occurs when individuals list deductible expenses on their tax forms that they did not incur. - Not Filing Tax Returns: You can’t hide from the IRS by not filing a return. The IRS receives tax statements from employers and interest statements from financial institutions. If you made money, the IRS likely knows and expects you to file a return. - Deliberately Underpaying Taxes: Filing your return is only half of your responsibility. You are also required to pay your taxes. Failing to pay can be punished as harshly as if you never filed. If you’re having trouble paying, contact the IRS or state agency to arrange a payment plan. - Claiming Business Deductions for Personal Expenses: The IRS is on the lookout for small-business owners and self-employed individuals who write off their personal spending as business-related by making the payments from their business bank accounts. ## Questions on Tax Avoidance vs. Tax Evasion? A Tax Lawyer Can Help The line between tax avoidance and tax evasion can be narrow. Therefore, it’s always best to seek the legal advice of a [local tax attorney](https://lawyers.findlaw.com/taxation-law/?fli=dcta) if you are concerned that your efforts at tax avoidance could be considered illegal by the IRS. Likewise, suppose state or federal tax authorities have already contacted you about an issue with your taxes. In that case, it’s important to have a skilled advocate who understands the laws to protect you. Was this helpful?
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