Tax Time: How to Avoid Simple Mistakes that Could Cost You Big Time

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tax time 2017

April 18th is looming over most of us and, while it may seem like the only people excited about this time of year are accountants, tax season is a necessary evil. With all the numbers and figures involved, doing your taxes can end up being more complicated than you think. The IRS estimates that about 17 percent of taxpayers fail to comply with tax laws in one way or another.

Here are a few things you need to know about tax mistakes you may be making that could cost you big time:

What actually qualifies as tax fraud? It may seem like there is a fine line between what qualifies as an honest tax mistake and actual illegal activity. Here is the difference:

Tax Mistakes:

  • Missing or incorrect information
  • Math miscalculations
  • Using the wrong type of return
  • Claiming the wrong deduction
  • Unreported income

Tax Fraud:

  • Preparing or filing a false tax return
  • Using a false social security number to file a tax return
  • Failing to file a tax return if you earned taxable income
  • Failure to pay taxes due
  • Making a false claim on a tax return
  • Creating or submitting false documents with a tax return
  • Claiming exemptions for nonexistent dependents

Do not forget the forms with your tax credits: Claiming to qualify for various tax exemptions and credits could save you thousands, but not if you forget the correct forms for these credits. While forgetting a form or forgetting to fill out all the information on a form is a common and often honest mistake, it can alert auditors to look into your taxes and perceive the exclusion as purposeful, which, in turn, can make you liable to a tax fraud case. Be thorough and careful when going through your taxes and be sure to give yourself enough time. Procrastinating on your taxes is the quickest way to make a mistake that could cause you a major headache down the road.

Get the help of a tax professional: A lot of people wishing to save money prefer to take their taxes into their own hands. There are several reliable, at-home software services that you can use, but if this still seems daunting to you, get in contact with a professional. For you novice taxpayers out there, we recommend working with a credible, honest tax professional to assist you with managing your taxes. Do your best to keep excellent records of income and expenses, particularly if you work for, or own, a cash-based business.

If you get audited: If the IRS is auditing you, then you are in particularly dangerous territory. Some accountants advise their clients to meet with the IRS agents. Before you make that decision, you need to understand all the legal implications of talking to the IRS. In our experience, this is the moment where a civil audit can go to a criminal prosecution very quickly.

 

Do not let your minor tax faux pas be your downfall. With years of tax evasion experience and legal know-how, the attorneys at Bannister, Wyatt & Stalvey are here for you through your financial ups and downs. Contact us today to schedule a free consultation.

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