What is the difference between tax avoidance and tax evasion?

Tax avoidance and tax evasion are two terms used to describe taxpayers’ behavior related to taxes. In Florida, tax avoidance is legal, while tax evasion is illegal. Tax avoidance is the legal process of minimizing the amount of taxes that an individual or business owes. This can be done through multiple ways, such as taking advantage of tax deductions, exemptions, or credits. An example of tax avoidance is when a business claims depreciation expenses on their taxes to reduce their taxable income. Tax evasion, on the other hand, is the illegal process of deliberately not paying taxes that an individual or business owes. This can include not reporting income earned, not filing tax returns, or underreporting or overstating deductions. Tax evasion is criminal in nature and can lead to serious penalties such as fines, jail time, or both. The key difference between tax avoidance and tax evasion is legality. Tax avoidance is legal, while tax evasion is illegal. Taxpayers are encouraged to take advantage of the legal ways to minimize their tax burden to save money, but should avoid any illegal activity that could lead to criminal charges.

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What is the difference between tax avoidance and tax evasion?

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