What is the difference between tax evasion and tax avoidance?

Tax evasion and tax avoidance are two terms often used when referring to taxes and the obligations that come with them. However, they mean two very different things. Tax evasion is the illegal act of avoiding tax payments to the government. This is done by failing to report income, falsely claiming deductions and exemptions, or underreporting income. People who are convicted of tax evasion face criminal penalties, including hefty fines and even jail time. Tax avoidance, on the other hand, is a perfectly legitimate course of action. It is the legal act of finding ways to reduce taxable income and increase deductions. This can mean taking advantage of tax credits, avoiding capital gains and claiming deductions in a way that reduces your overall taxable income. In Nevada, taxpayers should always abide by the law when it comes to taxes. Tax evasion is never a good option, as the consequences can be severe. Knowing the difference between evasion and avoidance can help taxpayers avoid penalties and ensure they are compliant with international tax law.

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What is the difference between tax evasion and tax avoidance?

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