What is the difference between tax evasion and tax avoidance?

Tax evasion and tax avoidance are two terms that are often heard when discussing tax laws. This article will discuss the differences between the two, specifically in Minnesota. Tax evasion is the illegal act of avoiding paying taxes. This includes willfully not filing a tax return, filing a false return, failing to report all income, or using fake deductions to reduce taxes owed. Tax evasion is a crime and can result in hefty fines or jail time. Tax avoidance is the legal process of using deductions, credits, and other strategies to reduce a person’s tax liability. This means that a taxpayer is actively avoiding paying as much taxes as they legally could be. This is different from tax evasion because although the taxpayer is paying less in taxes, they are doing so legally and not deliberately avoiding the filing or payment of taxes. In Minnesota and nationally, tax avoidance is the preferred method of reducing taxes. It is important for taxpayers to understand the rules and regulations surrounding tax avoidance to ensure that they are following all guidelines and accurately filing their taxes. Tax evasion is never the right option as it is illegal and can lead to serious consequences.

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What is the difference between tax evasion and tax avoidance?

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