You hear the argument each time. The IRS and the government tax everyone else and collect more money from the poor than they do from the rich. The rich are forever utilizing tax loopholes so that they do not have to settle any taxes. These people are practicing criminal behavior – and getting away with it!
The system has been abused over the years. Tax professionals can definitely find loopholes to let people pay less taxes. But only the people earning at least $100,000 a year can afford them. Taking advantage of a loophole and acting illegally are considerably different. If you wish to pay less taxes, there are various steps you can do and various things that you really have to avoid if you want the IRS to stay away or for you to stay out of prison.
People who earn more than $100,000 per year pay almost 60% of all taxes. The people within this bracket have a higher risk of being audited because the IRS focuses their attention on them. In case there’s an IRS problem or audit, always save vital records to utilize as reference and keep your exposure to a minimum.
How they’re cheating the IRS of taxes via offshore accounts are what most people like to show off about. These people normally get caught. This is because anyone who reports such offenders are rewarded by the IRS of up to 10% of the amount collected through their fraud hotline. Such offenders can get their due if you keep your ears alert.
There are so-called ‘secret’ methods to pay taxes less sold to people. Do you truly think these ‘secret’ methods exist when the tax code is available for anyone to examine? These will most often be rejected by the IRS and in court. Anybody filing a tax return that’s fraudulent can be penalized up to $25,000 by wasting the government’s effort.
A loophole that business owners normally abuse is the deduction of business expenses. The IRS has reason to audit them when they try to deduct personal expenses as business expenses. It’s best to draw the line between business and personal expenses if you do not want IRS issues on your hands.