Tags & Categories in Menus

I'm new to Build a Joomla Website and mistakenly posted this to the general board yesterday. I'm working on the basic structure of new site. The template I am using utilizes K2. I would like to build the site on a limited number of Categories and utilize Tags to organize Items in each category. Ideally, I would like the menu to show a Category and list the Tags in that category so the user can select one or more Tags and view all items that match that criteria. I could be wrong but I don't think I can create that functionality with Categories and Sub-categories. For example, if the the site were a magazine and one of the categories is "Literature" with possible tags of "Comedy" "Novel" "Short Story" "Series" "Fiction" "Biography" "Documentary" "Autobiography"- the user could select Comedy, Fiction, Short Story and be presented with all Fictional Comedy Short Stories. Is this possible, and if so can you provide me with some direction on how to accomplish this type of menu/search system or point me to some instructions.