Money management and tax planning

Money management includes effective tax planning. Your financial plan should include ways to lower your tax liability so you have more money to spend, invest, or donate. The key to effective tax planning is to reduce your taxable income, rather than your gross income, through all appropriate and legally available opportunities.

The act of reducing taxes in ways that are legal and compatible with the intent of Congress is called

Tax evasion or tax avoidance?

Austin is preparing his tax return for the year and is looking at ways to save on his tax bill. Austin worked a full$-$time teaching job and tutored on the side. His employer reported his income from his day job, but the money Austin earned from tutoring was not reported to the IRS. Austin is thinking about leaving the tutoring earnings out of his income on his tax return. Is this tax evasion or tax avoidance?

Tax avoidance

Tax evasion