What is the difference between tax evasion and tax avoidance?

Tax evasion and tax avoidance are two different strategies used by taxpayers in relation to paying taxes. Tax evasion is the act of deliberately failing to pay one’s taxes. This usually involves deliberately under-reporting income or over-claiming deductions or credits. Tax evasion is a serious criminal offense in New York and is punishable by fines, imprisonment, or both. Tax avoidance, on the other hand, is a legal strategy. It involves taking advantage of the various loopholes and deductions available in international tax law in order to reduce one’s tax liability. Tax avoidance is an acceptable practice, as long as the taxpayer is not deliberately misrepresenting income or taking advantage of loopholes created at the expense of the government. In conclusion, the difference between tax evasion and tax avoidance is that tax evasion is illegal and can have serious consequences, while tax avoidance is a legal strategy which allows taxpayers to reduce their tax liability, as long as the taxpayers are not deliberately misrepresenting their income or taking advantage of loopholes created at the expense of the government.

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