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? George is preparing his tax return for the year and is looking at ways to save on his tax bill. George worked full time in the day and tended bar at night. His daytime employer reported his income for his job, but his tips from tending bar at night were not reported to the IRS. George is thinking about leaving the tip earnings out of his income on his tax return. Is this tax evasion or tax avoidance? Tax avoidance Tax evasion