Perhaps you expected a tax refund this year but received a bill from the IRS and accusations of committing tax fraud. What did you do wrong?
The Chicago Tribune explores examples of unintentional tax fraud. If anything below sounds familiar, you may have the beginnings of a defense against potential white-collar crime charges.
Failing to report your full income
You must report all income you receive in a single tax year, including gig work you perform. Financial institutions and employers report how much they pay employers and contract workers. If discrepancies appear between what you report and the third-party details the IRS has, you may face tax fraud penalties.
Claiming inappropriate credits
Taxpayers should not “fudge” their income to qualify for tax credits to lower their tax liability. No matter if you file your own taxes or hire someone to do the job for you, everything on the return becomes your responsibility. Claiming credits you do not qualify for could result in fees and penalties.
Claiming dependents inaccurately
Are you related to the dependent you claimed on your taxes? Did the dependent live in your house for over half the tax year? Did the dependent appear on a filed joint tax return? You must tread carefully when claiming dependents.
Failing to file
You cannot bear guilt for tax fraud if you did not file taxes, right? Not filing becomes an act of fraud because you must submit necessary financial information to the IRS. Neglecting to do so represents a failure in your legal obligation to pay taxes.
Facing tax fraud requires immediate action, no matter if you made an innocent mistake. Not knowing tax law may not absolve you of guilt for breaking tax law.