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DaniilM [7]
2 years ago
8

Tax evasion versus tax avoidance

Business
1 answer:
lora16 [44]2 years ago
8 0

Answer:

1. The act of reducing taxes by deliberately understating income or overstating deductions is called ______

Tax evasion

2. Leaving the tip earnings out of her income on her tax returns is

Tax evasion

Explanation:

Tax evasion is deliberate reduction of gross income either by excluding, understating, omitting income, or overstating deductions.  It is not legal.  Tax avoidance is managing taxable income by effective tax planning (e.g. through investments, insurance, etc.) so that less tax is paid.  It is legal and allowed.

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