10 Very Risky Tax Dodges

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It’s that time of year again.  The time when Uncle Sam seems more like your boss than you uncle.  The fact is many of us tend to fudge on our taxes, most of us actually, with us “fudgers” numbering in the 7-80 percentile range and the IRS knows it.  Regardless, one should be very careful because the penalties can be steep if you take too much “fudge.”

So, before you decide that your $800 computer really cost three times that much, you might want to think again.  This should give you a pretty good idea of what we’re talking about:

  • Skipping receipts: Even if you think the IRS will never ask you for them, you should save your receipts every time you claim a deduction—for anywhere from three to six years. If the IRS does ask for them and you don’t have them, not only will the deductions be disallowed, you may face penalties and interest.
  • Filing late: Yes, it’s better to file late than not at all, but if you owe taxes and pay them late, you again face interest and a penalty. More than two months late and you’ll owe even more.
  • Protesting: Maybe you’re against taxes for political reasons. The IRS does not care. If it thinks you are using a political argument to avoid paying taxes, it can hit you with a penalty from $25,000 to a whopping $250,000—plus possible prison time.
  • Pretending to be single: Whether you’re in the middle of a divorce, actually divorced, or were widowed in the past year, you’d best select an accurate tax status—not the one that will cause you to owe the least. If you chose the wrong one, you’ll probably find yourself audited.
  • Intentionally creating your own losses: A really bad idea and one that can cost you dearly,, not only your money but your freedom.  Gross negligence is the benchmark and if the court finds that you are just that you can be subject to not only huge fines from the IRS but jail from the judge.
  • Inflating your business expenses: The IRS is well aware that taxpayers overstate expenses to claim higher deductions however if you grossly overstate the cost of your computer they can penalize you not only for inaccuracy but for intentionally inflating expenses.  That will cost you big bucks in penalties.
  • Taking undeclared cash payments:  The IRS isn’t as clueless as you think. The IRS looks for norms by profession and geographic area. If you’re constantly reporting on the low end, you may already be on their radar.  So if you own your own business and think you can take cash under the table without reporting it you might be wrong.
  • Not making your estimated payments: The IRS imposes a penalty for taxpayers who are required to make estimated payments and fail to do so. It’s important to try to file by the applicable deadlines.  If you are going to owe less than $1,000, don’t worry about it.  But if you owe more or are a repeat offender watch out.
  • Claiming your mother as a dependent:Claiming the wrong number of dependents is one of the easiest mistakes to get caught on. This is because the IRS asks you to confirm the name and Social Security number of dependents.  Also, adding or removing the number of dependents can trigger an audit, so be careful.
  • Pretending you are still single: If you intentionally choose an inaccurate filing status to boost your tax benefits, you’re likely to find yourself selected for auditing. An audit can result in a higher tax bill, as well as interest and penalties.
  • Not filing or paying your taxes at all:  While criminal prosecution is a real possibility for choosing not to file and pay your taxes, it’s not the only consequence. Even if the IRS decides not to file criminal charges, the IRS can impose significant underpayment penalties and interest on taxes you never sent in — and then take serious steps to collect. Collection activities could include the filing of a federal tax lien, raiding bank accounts, seizing assets or levying wages.

So that being said, I have an old saying: Don’t mess with the IRS.  Sure being honest now may be costly, but being dishonest may cost you a lot more later.  We want to know what you think so please leave a comment.

Many thanks to our good friends at Newser and Time for their contributions to this story.

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About Post Author

Professor Mike

Professor Mike is a left-leaning, dog loving, political junkie. He has written dozens of articles for Substack, Medium, Simily, and Tribel. Professor Mike has been published at Smerconish.com, among others. He is a strong proponent of the environment, and a passionate protector of animals. In addition he is a fierce anti-Trumper. Take a moment and share his work.
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12 years ago

At last!

12 years ago

What’s tax?…;-)

Used to pay it before I was self employed….paid it for 32 years. I’ll pay it again if the bastards will spend MY money MY way…education / old people / animals / enviroment etc etc

otherwise…fuck em.

12 years ago

The tax code is one of the most complex piece of reading material imaginable, even the Bible makes more sense.

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