What is the difference between tax avoidance and tax evasion?

Tax avoidance and tax evasion are terms related to the payment of taxes, but the two concepts are not the same. Tax avoidance is the legal process of minimizing taxes owed by taking advantage of all deductions and credits available to the taxpayer. Examples of tax avoidance include claiming deductions for legitimate expenses and taking advantage of tax credits when filing taxes. Tax evasion is the act of intentionally not paying taxes that are legally owed. This could include not reporting income, filing false or incomplete tax returns, or failing to pay taxes that are owed on time. Tax evasion is illegal and can result in criminal charges being filed against the taxpayer. The main difference between tax avoidance and tax evasion is that tax avoidance is a lawful way to reduce the sum of taxes owed while tax evasion is an illegal way to reduce the amount of taxes owed. Tax avoidance is a legal strategy that uses deductions, credits, and other financial practices to reduce the amount of taxes the taxpayer owes. It is important to note that taking part in tax avoidance does not absolve a person from fully paying taxes that are legally required. Tax evasion is always illegal and can have significant financial and legal consequences.

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What is the difference between tax avoidance and tax evasion?

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