ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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IRA, 401k, 403b
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mutual fund
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stock
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risk
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Detailed explanation-1: -A tax shelter is a legal strategy or investment vehicle that is designed to reduce or defer tax liabilities. Tax shelters can be used by individuals, businesses, or organizations.
Detailed explanation-2: -An effective way to reduce taxable income is to contribute to a retirement account through an employer-sponsored plan or an individual retirement account (IRA). Both health spending accounts and flexible spending accounts help reduce taxable income during the years in which contributions are made.
Detailed explanation-3: -Tax Evasion: Tax Evasion is an illegal way to minimize tax liability through fraudulent techniques like deliberate under-statement of taxable income or inflating expenses. It is an unlawful attempt to reduce one’s tax burden.
Detailed explanation-4: -Tax Planning: It is a legal process of reducing tax liability through various provisions in the tax laws, such as deductions, credits, rebates, and exemptions. It is legal and recommended for taxpayers to reduce tax burden.
Detailed explanation-5: -Tax avoidance is a moral and legal method to minimize tax liability. The motive is to reduce the amount of tax that you owe.