Taxes season is often a very confusing time for many people across the country. Because of how severe consequences can be for tax fraud, it is important to be sure that you were not making any crucial mistakes in your taxes. It is possible to commit tax fraud by accident, and the consequences can still be just as severe. Here are four ways someone might commit tax fraud without knowing:
Inaccurate charitable donations
Donating unwanted possessions to goodwill or the salvation army is an excellent way to clear out your closet and also save some money on your taxes at the same time. However, if you overvalue your donations, it could come back to haunt you. Arguing that an old box of t-shirts is worth $600 in write-offs could place you in some seriously hot water.
Failing to file taxes
Even if you have the proper tax deductions on your paychecks, you still need to file your taxes. Forgetting about tax season is not an excuse for not filing your taxes, and it will not be enough to help you avoid harsh sentencing for tax evasion.
Altering business expenses
The money you spend on your business can help offset what you pay in taxes, but that does not mean you can guess what those expenses are. Keep an accurate record of your business expenses so you can deduct exactly what you spent, rather than risking possible charges against you.
Recording only some of your income
Reporting the income you earned from your primary job using a W2 is the bread and butter for most people’s income taxes. However, if you have another source of income, you also need to report that as well. Whether you earned money through investments, gambling, rental income, or interest from bank accounts, you still need to report that income.