Filing your income taxes can be complicated. Without meaning to, you can make a mistake that works in your favor. Unfortunately, for the IRS, these errors could still appear to be tax fraud, a serious crime.
Nobody wants to have to defend themselves in court against felony charges because of a mistake. Here are five ways you could accidentally trigger an IRS investigation into your taxes.
1. Forgetting to report some of your income
Many people simply report the income number on the W-2 their employer issued them. But others have multiple sources of income. If one of those sources comes in cash, like tips, it can be easy to forget about when tax time comes around.
2. Inaccurate non-cash donation valuations
A cash donation to charity is easy enough to report. But you can also deduct the value non-cash donations, such as clothing or a used vehicle. The problem comes when you don’t know the exact value of those donations. If you put down a significantly higher deduction than the items were worth, that could be potential tax fraud.
3. Other deduction errors
Both Louisiana and federal tax law lets you make several deductions, such as for education and medical costs. But an inaccurate number could cause you legal trouble, even if it was an honest mistake.
4. Mixing up business and personal expenses
If you own your own business, the line between business and personal expenses is not always clear. Deducting the wrong thing on your personal taxes can lead to serious problems down the line.
5. Not filing a return
Intentionally failing to file an income tax return by the deadline (or filing for an extension) is a crime. You might have missed the deadline accidentally, but the IRS might charge you anyway.
A conviction on tax fraud charges can result in a prison sentence and heavy financial penalties. A defense attorney familiar with tax law can represent you and possibly work out an outcome that helps you avoid prison, and possibly get the charges dismissed.