Stupid Tax Tricks – Things Not to Do

Al CaponeNone of us enjoys paying taxes. We see the very rich layer of society getting away with murder financially and naturally want the same privileges in life. Besides, getting something for free always holds appeal.

As a result, tax return schemes get ever more complex. Internal Revenue Service’s databases can cross-reference Social Security numbers with our returns. So fewer folks have tried writing off their cat, or generating phony W-2 forms to snag undeserved earned income credits.

Unsurprisingly, Americans are nothing if not creative. Please, apply your talents to more worthwhile efforts than these tax-evading mistakes:

The Great British Male - The Dodgy Dealer

The Rich Guy

Someone asked me to prepare a tax return reporting $24,000 income. The gentleman was dripping with heavy gold chains and wearing a $5,000 watch. His suit cost more than my penthouse office rent. All the IRS had to do was look at his up-scale address, or notice his $800 auto registration deduction, signaling a luxury car, and know he was obviously lying.

  • Lesson – Your tax return must match your lifestyle – or explain why it doesn’t.

Money

 

Found Money

One gal contacted Ask TaxMama about the $20,000 she’d ‘found’ and used to pay off debt — $5,000 here, $500 there, $2,000 on another account. Would the IRS know about the payments? What she was really asking is, if she earned lots of unreported income and then started using it, would anyone notice?

  • Lesson – In an audit, IRS will look at all your deposits. If you can’t prove they are not income – they ARE income.

 

People who drive SUVs are so special, they get to park on the grass

California Chumps

This couple loved to show off their new sports car, great house and jewelry to friends. They bragged about not reporting most of their income on their tax returns. One friend had enough. She asked TaxMama® how to turn them in. IRS provides Form 211, to help citizens rat on each other. File anonymously or identify yourself. Simply provide enough information to prove the person has unreported income. Point to assets Uncle Sam can attach for payment. You could even get a reward.

  • Lesson? If you’re committing tax fraud, keep it to yourself.

I don't mind paying taxes

 

Bottom line? Cheating on your taxes is getting harder and harder to do. If IRS doesn’t catch you – someone will be happy to turn you in.

There are so many ways to keep your taxes low and under control, simply file an honest tax return and stop looking over your shoulder.

To avoid tax problems and to get tax help and tax advice join TaxMama.com® for free to get your own questions answered and find a wealth of answers already online.

Please tell us about stupid tax tricks you’ve seen! We’d love hear your story.

Image Credits:
Al Capone – Bradley Gordon – Flickr CC
The Great British Male – Terry Greenwell – Flickr CC
Money – Andrew Magill – Flickr CC
People who drive SUVs… – Malingering – Flickr CC
I don’t mind paying Taxes… – Futureatlas – Flickr CC

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About Eva Rosenberg, EA – Eva teaches businesses and tax professionals to succeed via live, online courses, newsletters, and workshops. The IRS Exam Review course trains tax professionals to pass IRS’s rigorous license examination. TaxMama’s® Family Membership helps businesses and individuals cut their taxes, cut their operating costs, enhance family quality of life – and to build a wealthy, tax-free or tax-deferred retirement. Eva Rosenberg and TaxMama® are regularly quoted in publications like the Wall Street Journal, US News & World Report, USA Today and more. You can hear Eva on the radio on Jim Blasingame’s Small Business Advocate show, Brent Clanton, and more. Entrepreneur Magazine named Eva’s book, Small Business Taxes Made Easy, one of the top tax books of 2005. LIFE Magazine selected TaxMama.com as their Editor’s Choice. With thousands of pages of free tax advice and information on TaxMama.com®, you can see why.

2 thoughts on “Stupid Tax Tricks – Things Not to Do

  1. Pingback: Ask TaxMama Issue 583 – A Dream

  2. Marilyn Herczog says:

    Oh, I have my tax fraud stories that still rankle. Had a Schedule C client who owed about $30k when I did his return. Never paid estimated taxes and made lots of money. Of course, he had a friend who went to a certain cpa and never had to pay much. So my client went to this guy, who simply made up deductions (I helped the business with bookkeeping so knew the expenses) like renting busi property -there were no busi rentals. Increased the expenses by about 50 to 75 thousand dollars!! So, of course, the client thinks I’m lousy at my job, and boy this cpa is good. I am still irked after 4 years.

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