Definition of Tax Evasion

What does the term "tax evasion" mean? What is meant by the term "tax evasion"?

"Tax evasion" is the illegal act of not paying the taxes that you owe. Tax evasion is different from tax minimization/avoidance, which is the legal act of using every tax law and loophole available to minimize the amount of taxes owing.

Definition of Tax Evasion - Financial DictionaryTax evasion carries stiff penalties in practically every country in the world. In many countries, tax evasion will result in prison time and/or stiff penalties.

When people hear the words "tax evasion", they generally think of some ultra-rich multi-millionaire who is avoiding their taxes by hiding money offshore. In reality, many people of all different walks of life evade paying their proper amount of taxes each and every year. Receiving money "under the table" for a job, making a false deduction on your taxes or failing to report a small source of income all fall under the definition of "tax evasion". In all three situations, you are paying less tax than what you are supposed to pay.

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