Are you unknowingly committing tax fraud?

On Behalf of | Apr 17, 2018 | Blog

Have you ever filed your own taxes and guessed when it came to an answer or two? If so, you are in good company. Taxes are inherently complicated, and even if you have the best intentions and believe you are being as thorough and forthright as possible when filing, you may still make errors out of a lack of knowledge, rather than malice.

Regrettably, however, Uncle Sam does not care whether your tax error came from ignorance or ill intent, and if you make certain mistakes when filing your taxes and reporting your income, it may trigger an audit or otherwise come back to haunt you. Just what types of errors are likely to trigger an audit or raise a red flag with the Internal Revenue Service? Many people who inadvertently commit tax fraud do so in similar ways, so to avoid calling unwanted attention to yourself, make sure to:

Only claim the earned income tax credit if you qualify

A great way to stand out when filing your taxes is to incorrectly claim the earned income tax credit if you are not, in fact, eligible to do so. To claim it, your income must fall below a certain threshold, and eligibility requirements vary from one year to the next. In other words, claiming the earned income credit one year does not automatically mean you will qualify for it the following year.

Be accurate about deductions

It is certainly reasonable that you would want to claim certain deductions relating to your business, whether they include gas, meals out, travel or what have you. However, overinflating deductions, or trying to claim deductions that do not directly relate to your business, is a good way to make the IRS take a second look at your tax return.

When it comes to filing your taxes, it pays to be honest. While you may lose a little money on your return or end up paying a little more in taxes than you planned, committing tax fraud, even if unintentional, can result in serious emotional and financial hardship.