Most Massachusetts residents would agree that they would not want to pay more than is owed on any financial obligation. For this reason, people look for as many ways as possible to avoid paying too much in taxes. Tax shelters are one way to make that happen, but when taken too far, it could turn into tax crimes.
Taxpayers can use a variety of tax shelters in order to decrease their taxes. For instance, many retirement accounts allow individuals to put aside money in order to avoid paying taxes on it — that is until they begin receiving distributions. These are considered legal ways to keep taxes lower.
Other ways to do so include taking certain tax deductions allowed under the tax code. Health savings accounts, student loan interest and the educator expense deduction are just some of the deductions some individuals can take. Tax credits are also available to lower tax obligations. Some of the credits people use include the child tax credit, the lifetime learning credit and the saver’s credit. Using these tax shelters is legal as long as the taxpayer qualifies to do so under the law.
Yet another way to shelter money from taxes is to move it to another country. However, taxpayers must still disclose this money to the IRS even if the country to which they moved it is not under any obligation to report it. Failing to pay taxes owed on this money and/or not reporting it moves using tax shelters into the realm of tax crimes. When accusations arise in light of this type of activity, it would be a good idea to consult with a Massachusetts tax attorney who can help determine the best way forward in light of the circumstances.