Could Common Errors Have Criminal Consequences?
Tax season is rapidly approaching. With a number of intricate forms involved, potential tax return money on the line, and the fear of getting in trouble with the IRS looming overhead, the process is often stressful. If you make a mistake, you could owe money, or, in serious cases, be accused of tax fraud.
There are many opportunities for errors in your filings, whether you forget a section of your form, miscalculate an equation, or accidentally put information on the wrong lines. These mistakes will likely cause a delay in any return you are anticipating, and depending on the error, raise a red flag and prompt the IRS to take a closer look.
1040EZ forms are, well, easy and in most cases, a fine way to file your taxes. However, if your tax situation is more complex, you will need a form that can account for the intricacies of your situation. If you do not, you will neglect to include necessary expenses, deductions, and write-offs, which leads to an incomplete and inaccurate filing.
Incorrect Use of Deductions
If you believe that you have costs that you can claim as a tax deduction, you must be aware of the rules of that specific deduction. The rules vary by type, and failure to adhere to them will lead to a falsified claim. What’s more, if your claims are deemed frivolous, you may be subject to a $5,000 penalty.
Even low-paying freelance work should be reported in your income statement. This includes side-hustle gigs. If you already submitted your forms but forgot to include a W-2 or 1099, you must file a form 1040-X as soon as possible to correct the error.
While mistakes are easily forgiven, a purposeful exclusion of some or all of your income is an example of income tax evasion.
The Good News
Luckily, the IRS understands that we are human. Honest mistakes could lead to a deeper investigation, but, without a proven intent to fraudulently file taxes, you will likely not be convicted of tax fraud. Still, for your own peace of mind, you should be sure to double check your taxes this season.
If you are facing allegations of tax fraud, call Brad Bailey Law today: (617) 500-0252.