Which of the following actions is a legal way to minimize tax liability?

Taking advantage of tax credits and deductions is a well-established and legal strategy for minimizing tax liability. Tax credits directly reduce the amount of tax owed and can significantly reduce tax liability dollar-for-dollar. Deductions, on the other hand, reduce the amount of income that is subject to taxation. Utilizing applicable tax credits and deductions aligns with the tax laws designed to support taxpayers and encourage certain activities, such as education, home ownership, and charitable giving.

This approach not only adheres to legal standards but also empowers individuals and businesses to effectively manage their tax obligations in a manner that is both ethical and compliant with regulations. It promotes financial planning and encourages taxpayers to seek available benefits that can help reduce their overall tax burden.

Other actions like failing to report income or fabricating expenses are illegal and can lead to severe consequences, including penalties or legal action. Delaying income recognition may also have implications that do not necessarily align with pursuing legitimate tax benefits, making it a less straightforward or advisable tactic.