Doing your taxes can be a rather daunting task. A lot of us tend to procrastinate the annual chore. Putting off filing your taxes can lead you to rush through forms and documents, which could cause you to misinterpret a question or put down the wrong information.
So, what happens if you rush through your taxes and make an error? Well, you’re more than likely going to be just fine. Only a small percentage of U.S. citizens are convicted of tax fraud. Others are usually audited or penalized with a small fine for their errors. Let’s examine a few aspects that can help define how the federal government will view any possible mistakes on your tax forms.
Common Mistakes
None of us are perfect - we’re all human. That’s one of the scariest phrases to think about when it comes to filling out important documents like taxes. The most common mistakes on tax forms include misinformation, simple math errors, or failing to uphold newer tax regulations.
Misinformation
Misspelled names are no reason to fret, as they can be easily fixed. In most cases, the IRS will still file the document. Other times, you’ll receive a notice and could have to pay a small fine to get it corrected. One tip for making sure you have the right information every spring is to save the previous year’s file. Once uploaded, you won’t have to worry about spelling and the accuracy of information moving forward.
Math Errors
Math mistakes become tricky. The IRS takes deductions very seriously, and if a math mistake is made it could result in a serious fine or penalty. However, mental lapses do happen. One of the best ways to make sure your math is correct is to use professional tax guidance. Another set of eyes is always helpful, especially if you have numerous assets and properties that need to be filed on your taxes.
New Tax Policies
While a lot of people might keep up with the latest laws and regulations, not everyone is adapting to the ever-changing policies the U.S. government makes. This can be tricky when it comes to filing your taxes. For example, the stimulus packages in the last year had a lot of requirements. If you weren’t aware of these requirements, it’s possible you may have incorrectly filed to receive the stimulus payment. Doing so could be considered an error and an audit could be made on your taxes.
Where Does Fraud Happen the Most?
Since the creation of the W-2, taxes have become much easier for individuals filing their taxes. It allows the filing process to pull already submitted information and gives the filing party a “cheat sheet.” So where does the majority of tax fraud take place? Well, it comes in the form of self-employed filers. This could be anyone who runs their own business or enterprise. When these types of taxpayers go to file, they usually must fill out business-related expenses, or deductions. This is where most tax fraud is made. According to the IRS, roughly 7% of these deductions are exaggerated.
It’s tough to predict the kind of repercussions a self-employed taxpayer might receive from falsifying their deductions. A simple tax audit could be executed if the business expenses don’t quite add up but are just over what an IRS agent thinks the actual total might be. On the other hand, if deductions are drastically high, the IRS could issue fines, penalties, and open an investigation.
Tax Mistake Representation
If you make a mistake on your taxes, chances are low that you’ll face any sort of serious repercussions. You’re probably going to get handed an audit that’s accompanied by a small fine. However, if the IRS decides they want to take further action, it’s important to find yourself the right legal representation. At Eldridge and Cravens, PC, our team of legal professionals has vast experience helping clients fight different types of federal offenses.
For more information on common tax errors and the legal services of Eldridge and Cravens, PC, call (865) 544-2010.