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Congress finally acted on New Year's Day, passing the "fiscal cliff" transfer pricing the law. This law extended the existing tax rate structure for single taxpayers with taxable income of lower USD 400,000, and married taxpayers with taxable income of less than USD 450,000. For people higher incomes, the top tax rate was increased to 39.6% These limits are determined ahead of foreign earned income exclusion.

Let's change one more fact in example: I give a $100 tip to the waitress, and the waitress is almost certainly my modest. If I give her the $100 bill at home, it's clearly a nontaxable contribution. Yet if I give her the $100 at her place of employment, the government says she owes income tax on it all. Why does the venue make a difference?

People hate paying income tax. Tax avoidance strategies are entirely legal and could be made good use of. Tax evasion, however, is not. Make sure you know where the fine lines are.

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