How to Avoid Accidental Tax Fraud
Audio version available here:
Length: approx. 1 min. 40 sec.
Avoiding tax fraud seems like common sense, but sometimes the line between legal tax avoidance and illegal tax evasion can be unintentionally crossed. Some of the most common filing mistakes arise from typos when writing names or taxpayer IDs, so before submitting your return, double confirm that all information is correct. However, before this step, ensure that you are using the correct form, because filing the wrong form can cause the IRS to suspect you of fraud.
Once you have confirmed the tax form and information are correct, verify that all your deductions and tax credits are valid. While deductions and credits are excellent ways to lower your tax obligation, you must follow the IRS’s strict rules and regulations in order to maximize these savings legally. Lastly, always report your income accurately. Deliberately reporting low or no income is an affirmative act of tax evasion and could result in a penalty of hundreds of thousands of dollars and prison time.
Keep in mind that these precautions are not meant to discourage you from taking the most deductions and credits possible. Tax avoidance is perfectly legal and encouraged to lower your tax burden. However, careful planning and preparation is essential to avoid mistakes and penalties. To navigate these potential pitfalls, you should work with a tax professional, like those at XQ CPA. We are dedicated to helping you achieve the lowest possible tax bill—legally. To get started on your tax journey, give us a call at 832-295-3353, or schedule a consultation here.
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