What is the difference between tax evasion and tax avoidance?

Tax evasion and tax avoidance may sound similar, but they are actually different. Tax evasion is illegal and involves not paying taxes that you owe. This can include willfully not reporting income, falsifying documents, or illegally claiming deductions. Tax evasion is a serious crime and may result in serious penalties such as fines, jail time, and other punishments. Tax avoidance, on the other hand, is a legal way to reduce the amount of taxes you owe. It involves taking advantage of legal methods to reduce your taxable income and the amount of taxes owed. This can include strategic deductions and credits, filing taxes in a certain way, or taking tax deductions to which you are legally entitled. In Washington, tax evasion is illegal and is defined and punished by the IRS in accordance with federal law. Tax avoidance, however, is legal and simply involves taking advantage of legal deductions and credits. While both tax evasion and tax avoidance reduce the amount of taxes you owe, only tax avoidance is a legal way to do so.

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What is the difference between tax evasion and tax avoidance?

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