What is the difference between tax avoidance and tax evasion?

Tax avoidance and tax evasion are two different types of activities that relate to taxes. Tax avoidance is when a person attempts to lower their tax burden within the law. This means following legal measures such as deductions, credits, and other factors to reduce the total amount of taxes owed. It is often viewed as a form of responsible financial planning and can be beneficial to taxpayers. Tax evasion, on the other hand, is when a person deliberately attempts to avoid paying taxes. Generally, this involves not declaring or underreporting income, concealing or transferring assets, claiming false deductions, or using other illegal methods to reduce taxes. It can be a criminal offense in Delaware and is punishable by a fine and/or jail time. Overall, the main difference between tax avoidance and tax evasion is that the former is legal while the latter is illegal and carries serious fines and penalties. Tax avoidance can be a great way to reduce the tax burden without breaking the law. Conversely, tax evasion, even though it may seem like a good idea, is risky behavior that can result in criminal prosecution.

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What is the difference between tax avoidance and tax evasion?

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