Tax Avoidance -vs- Tax Evasion

Just because a friend claims to file a particular form and have a particular deduction on their individual income tax return it does not necessarily follow that you too will receive the very same benefit.  No matter how simplified people tell you tax returns are the U. S. Internal Revenue Code is complex. The best way to work around the various forms that feed into Form 1040 on your own is by using tax preparation software that walks you through the process by asking you relevant questions.  TurboTax is one of many that are available.

What others have done in the past is not a justifiable defense should you be audited by the Internal Revenue Service.  That is not to say when someone brings something to your attention that you do not do the necessary research to see how it may affect your personal taxable income.  All things being equal know and understand the difference between tax avoidance (which is working within laws to reduce your taxable income) and tax evasion (which is the deliberate concealment and/or misrepresentation of relevant information in an effort to reduce your taxable income and this is illegal).

Tax planning is all about employing strategies that will reduce your taxable income within the parameters of the law.  In special circumstances where you have done the necessary research within your tax strategies if come across a tax law that is unclear you can apply for a Private Letter Ruling but these are only for a particular tax issue and only for that tax payer that applies for the ruling.  Most situations are covered fully within the Internal Revenue Code.  If you do not utilize the services of a tax professional then make use of the Internal Revenue Service website (IRS website) or alternatively telephone Toll-Free, 1-800-829-1040 for assistance in clarifying any issues you may have. 

For those of you doubting just how serious the ramifications of tax evasion can be take a look at the list below and I am sure all them felt at some point that they would never get caught.  Or maybe they did a simple arithmetic and said "what are the chances?"

1.  Wesley Snipes - Actor
2.  Ty Warner - Creator of Beanie Babies
3.  Lauryn Hill - five-time Grammy winning singer