That is a way to avoid taxes but I don't think it is the best way! It is obviously against the law but putting that aside if you want to break the law or not lets just call that risk. Not reporting is the riskiest way to avoid paying taxes. It requires you to lie often and then if you get caught the penalties are significant. My point is the best way to avoid taxes is to use a tax lawyer to legally use tax protections built into state and federal laws. For example, a properly structured Roth IRA. Sure you pay legal fees but doing so reduces your risk and avoids taxes. You also have the benefit of being honest which makes life easier in my opinion.