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Learn what is tax evasion in 2 minutes

Welcome to Professor Savings.com

We teach finance basics

Hi, I’m you’re host today Rayfil Wong

Today’s topic…

  What is tax evasion?

Let’s say Jane here wants to lower the amount of tax she has to pay the government

Don’t we all?

So she searches for strategies  to achieve this goal this is called tax avoidance.

 This includes tax credits  and tax deductions.

 One example is that Jane can max out her retirement plan 401 (k) contributionor have tax deductions

  from donating to certain charities to have the lowest adjusted gross income possible.

Simple calculations.

Original liability  minus deductions = lower tax liability

YAH!!

  let’s go on a cruise

These are strategies are used by tax professionals such as accountants are perfectly legal.

Jumping to the dark path tax evasion is   intentionally paying taxes owed such as not reporting accurate earnings

  or  not reporting the income  from interest earned this is a no no and illegal

Wwo bad things can happen

One, jail time.

Two, fines on not reporting tax filings.

Professor Savings signing off.

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