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CFO Tip: Don’t Lie on Your Taxes!!! Even celebrities get in trouble for doing this. Just see what happened to Shakira.
Last week, a court in Spain decided Shakira should stand trial for tax evasion related to taxes the singer allegedly failed to pay while living predominantly in the country.
If convicted, she could face jail time.
Many celebrities have run into tax troubles, including Martha Stewart, Sinbad, Wesley Snipes, Toni Braxton, Marc Anthony, Willie Nelson, Nicholas Cage, Lauren Hill, and Ja Rule.
All of them have been convicted of tax evasion.
So When Does Lying on Your Income Taxes Become a Criminal Offense?
A good CFO knows that when income is hidden or not reported (having income and intentionally not reporting it or over-reporting expenses) this is evasion and criminal out of the gate.
Failing to file isn’t immediately criminal, but it could become a criminal issue if ignored.
As a Professional CFO, I occasionally hear stories from colleagues like the contractor who built a significant addition onto his residence and deducted all materials under the cost of goods as if they were for customers.
That could certainly be considered criminal—an intentional of under-reporting income.
So What’s The Difference Between Tax Evasion and Tax Avoidance?
Tax avoidance is legally reducing your taxes and taxable income using legitimate methods.
Taking all the deductions, you’re entitled to efficiently structuring your entities for lower taxes, taking advantage of retirement & insurance incentives, and making use of legal loopholes (incentives) placed throughout the tax code.
And that’s where tax planning comes in.
It’s near impossible for a business owner to study and learn all of the intricacies of the tax code. Trust me, I’ve been doing this for over 20 years, and I don’t know it all.
But a systematic, proactive approach to planning by a qualified CFO is the best way to reduce your annual tax bill legally.
And you might think your C.P.A. or CFO is already doing this. Maybe they are, but I highly doubt it; most C.P.A.s are only tax preparers, not strategic tax planners.
I’ve trained and coached thousands of accountants during my career. It’s rare for a C.P.A. or CFO to have a process in place to plan and lower your taxes for this year.
We meet with most tax planning clients quarterly to update strategies, revise projections, and dial in the actual tax liability long before year-end.
There’s no reason your 2nd most significant cash expense for your business should be a surprise.
Let us take care of your taxes so you can concentrate on what you do best – running your business!! We can be your trusted CFO. Let’s discuss more in a strategy session. Book Your Free Assessment Here.