Today’s tax system is undeniably complex. If you are like many people across Texas, you may have concerns about whether you are doing everything “by the book” when filing. Unfortunately, there are many areas in which you may make errors when filing your taxes. In some cases, mistakes made during filing can lead to allegations of tax fraud.
Tax fraud is a serious offense that can bring with it serious consequences. Thus, the more you understand about what could potentially constitute tax fraud, the more likely you will be to avoid making errors that attract the attention of the IRS. Just what are some of the ways Americans commonly find themselves facing tax fraud charges?
Failing to report income
Depending on your line of work, you may have questions about exactly how much of your income you need to report. When you are unclear about whether you need to report certain income, you would be wise to go ahead and report it. If you do not, you run the risk of facing tax fraud or tax evasion charges. If, for example, you make your living bartending or waiting tables, avoid the temptation to underreport your tipped income, as doing so can come back to bite you.
Taking incorrect or inflated deductions
Taking deductions not meant for you is one way to attract the IRS’s attention, and fudging how much you write off in deductions is another. For instance, if you are self-employed, you need to be careful of what you write off as a business expense. Otherwise, you can expect it to raise a red flag with the IRS. If you only use, say, a small office in your home for work, you cannot write off electricity and other bills that apply to the entire home. Instead, you can only write off a percentage of them based on how the size of your office factors into the entire size of your house.
While these are two common ways Americans find themselves facing tax fraud charges, this is not an exhaustive list of all actions that can lead to trouble.