Taking advantage of legal tax shelters

The term “tax shelter” often gets a bad rap. In media coverage, tax shelters are often discussed as fraudulent mechanisms for businesses to illegally avoid paying all of the taxes they owe. However, it’s worth noting that there are legal ways to use tax shelters as well – often with considerable benefits to an individual’s bottom line.

As outlined in a recent article from U.S. News & World Report, there are certain ways that taxpayers can reduce what some refer to as “overtaxitis.” This is the idea that an individual may face a more severe financial burden than necessary due to not taking advantage of available tax breaks.

Understanding your options

There is always the question of legality when it comes to taxes. What is tax fraud versus a legal tax shelter? In a very general sense, tax fraud is false information provided on your taxes. Tax shelters, generally speaking, are ways that business owners – and other taxpayers – can reduce their financial tax burdens through certain tax benefits.

The difference is in knowing what types of tax savings fall into which category. What does deferring income mean for your company? Does your specific financial situation allow you to qualify for this type of maneuver? The same questions can – and should – be asked for what company assets qualify as a taxable benefit, or for any of the options listed in the article.

Tax laws are generally confusing, even to seasoned corporate professionals and government officials. Because of this complexity, it is crucial to seek the assistance of an experienced tax lawyer. They can leverage their knowledge and experience to help you identify the best legal solutions to avoid unnecessary tax burdens.