tax avoidance

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Related to Avoidance, Tax: tax evasion, Tax shelters

Tax avoidance

Minimizing tax burden through legal means such as tax-free municipal bonds, tax shelters, IRA accounts, and trusts. Compare with tax evasion.

Tax Avoidance

The act or practice of taking steps to legally reduce one's tax liability. One may do this directly by taking advantage of an applicable tax credit or tax deduction. More often, however, the term refers to a person or company making trades or conducting other activities specifically to avoid taxes. For example, one may sell a stock at a loss to offset a gain on the sale of another stock. It is important to note that tax avoidance is different from tax evasion, which is the minimization of one's tax liability through illegal means, though it is generally acknowledged that the line between the two can be murky.

tax avoidance

The reduction of a tax liability by legal means. For example, high-income individuals avoid significant federal income taxes by purchasing and holding municipal bonds. Compare tax evasion.

tax avoidance

any efforts by taxpayers to arrange their financial affairs so as to avoid paying TAX by taking maximum advantage of taxation allowances and reliefs. In this way taxpayers can legally minimize their tax burden. Compare TAX EVASION.

tax avoidance

any efforts by taxpayers to arrange their financial affairs so as to avoid paying TAX by taking maximum advantage of taxation allowances and reliefs. In this way taxpayers can legally minimize their tax burden. Compare TAX EVASION.

tax avoidance

Perfectly legal and ethical strategies for reducing taxes to the lowest possible number. Contrast with tax evasion.