Is it possible to pay nothing in taxes?
No one said that avoiding taxes in a legal manner is easy, but it certainly is not impossible. If you take advantage of all the tax credits and write-offs offered by the IRS, you are certainly one step closer to this objective.
If you thought moving to another country will get you rid of your taxes, think again. According to the IRS, “if you are a U.S. citizen or a resident alien living outside the United States, your worldwide income is subject to U.S. income tax, regardless of where you live.” Consult a financial planner to find out more about tax loopholes and make sure you have these Tax-Related Documents You Should Always Keep in Handy, if you want to lower your taxable income and even eliminate your tax bill completely without being accused of tax fraud. Speaking of fraud, this brings us to the next question.
Is it legal to avoid paying taxes?
Yes and no. If you only try to lower your taxes by taking advantage of the deductions and tax credits offered by the IRS, you’re on the legal side. That’s called tax avoidance. However, if you don’t pay your taxes, partially or integrally, on purpose, it means you are evading taxes. Tax evasion is subject to criminal charges and substantial penalties.
To avoid any unwanted problems, just file your annual tax returns. Even if you don’t think you owe any taxes, it’s better to be safe than sorry. If the IRS finds something wrong, you could end up with huge fines, a frozen bank account and wage garnishments until the debt is satisfied.
The answer to eliminating your tax bill is not skipping taxes, but your eligibility for deductions and credits. That’s where your attention and focus should go.