PLAY: Tax Avoidance or Evasion?

Front

Angie, a software engineer, frequently adjusts her 401(k) contributions, sometimes reaching the maximum annual limit. She claims these contributions as a deduction on her taxes. Is this legal or illegal?

Back

Legal - Tax Avoidance

Front

Stephen works as a server at a local restaurant where he receives cash and credit card tips as part of his income. At the end of his shift, he chooses to report his credit card tips, but not his cash tips.

Back

Illegal - Tax Evasion

Front

Brooke donates money to a non-profit organization and reports a tax deduction for the amount of her charitable contribution.

Back

Legal - Tax Avoidance

Front

Jacob, a freelance writer, uses a specific area in his home for his business. He claims a deduction on his tax return for expenses related to this part of his home. What is this practice?

Back

Legal - Tax Avoidance

Front

Katie, a small business owner, claims her personal grocery expenses as an operational expense for her business on her tax return. Is this legal or illegal?

Back

Illegal - Tax Evasion

Front

What is the classification of Jimmy's action of contributing to a high-deductible health insurance plan to lower his taxable income? Options: Legal - Tax Avoidance, Illegal - Tax Evasion

Back

Legal - Tax Avoidance

Front

Byron and Alexis open a 529 college savings account for their daughter's education. The earnings in this account are not reported on their taxes.

Back

Legal - Tax Avoidance

Front

Kevin donates $10,000 to a charitable organization in addition to volunteering from time to time. He reports the $10,000 donation, plus an additional $5,000 (what he would have made at his job if he wasn’t volunteering) on his taxes. What is this action classified as?

Back

Illegal - Tax Evasion

Front

Samantha has a variety of investments, including stocks, bonds, and mutual funds. Each year, she receives numerous statements about dividends and capital gains. She meticulously reports her largest gains, while omitting smaller gains or losses because they don’t significantly impact her investment income. What is this practice?

Back

Illegal - Tax Evasion

Front

What type of tax action is Alex claiming by upgrading his home with energy-efficient windows and solar panels? Options: Legal - Tax Avoidance, Illegal - Tax Evasion

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Legal - Tax Avoidance