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Are you unknowingly committing tax fraud?

| Jul 17, 2018 | Firm News

It is no secret that, unless you work in, say, accounting, filing your taxes can prove tremendously complicated. The language can be complex, and the process tedious. But it is also incredibly important to maintain honesty and integrity throughout the process, or you can risk facing some serious penalties.

Often, tax-related errors happen because of a lack of understanding rather than intentional malice. But unfortunately, your intentions do not matter if the Internal Revenue Service determines you have made certain errors or omissions. Because the penalties associated with tax fraud can prove considerable, it is important to recognize common tax errors many Americans make so you can work to avoid similar mistakes yourself. Nowadays, know that you may be inadvertently committing tax fraud if you:

Claim incorrect or inflated deductions

An easy way to raise the ire of the IRS is to take the wrong deductions, or take inflated deductions, when filing your taxes. There are highly specific rules you must follow when deducting business expenses and the like, and a good way to make the IRS take a second look at your filing is to claim more than you should in an effort to save money. Using a tax professional, or relying on tax preparation software, may help you avoid such errors.

Claim the earned income tax credit incorrectly

The earned income tax credit is in place to help lower-wage earners, and you must meet specific criteria if you wish to claim it. Not meeting the criteria but claiming this credit anyway is a good way to call unwanted attention to yourself.

Fail to report income

You have an obligation to record all income earned during the year, and this includes any tips you might make working as a server, cab driver or what have you. Failing to report tips is something that many people do, but it can also land you in serious hot water.

Even if your tax errors are unintentional, they have the capacity to bring you considerable trouble. Recognizing where others make errors may help you avoid interest charges and potential criminal penalties.

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