“...in this world nothing can be said to be certain, except death and taxes.” Unfortunately, Benjamin Franklin’s famous line still rings true in 2022. Taxation is an essential part of everyone’s personal financial situation and should be reviewed periodically, same as any other aspect in life. Even considering its importance, it can be easy to sit back and take a passive strategy towards your tax situation. However, that mentality could be very costly towards your long-term financial goals.
In the landmark case Gregory v Helvering, the judge set the precedent for tax avoidance by saying “Anyone may arrange his affairs so that his taxes shall be as low as possible: he is not bound to choose that pattern which best pays the Treasury; there is not even a patriotic duty to increase one’s taxes.” An important thing to remember is that there is a difference between tax avoidance and tax evasion. Avoidance is legally arranging your affairs to minimize your tax liability while evasion is a deliberate underpayment.
Small tweaks to your tax strategy can often reap large benefits over time. Periodically taking the time to meet with an advisor, as well as working in concert with your tax professional, can help ensure your cash flow and accounts are structured in the most tax efficient manner possible. While death and taxes might be inevitable, there is no reason to pay more than your fair share!