Do you exaggerate your taxes?

[mickeyfan2]

Overstating deductions is a common way that people commit tax fraud. Another form of cheating is not reporting income that should be reported. Here are some examples:

- Money earned on cash jobs (I know of a union electrician who works every Saturday for cash on side jobs and never reports a penny).

- Gambling winnings (a lot of winnings are not reported because they would call attention to illegal gambling).

- Profits from illegal activities in general.

And that is probably just the tip of the iceberg.

I am don't work under the table, gamble or engage in illegal activities. So I guess it is pay Uncle Sam and sleep at night for me.

 

[momto2girls]

No, we don't cheat. We own a small business so we're already high on the list to be audited. We don't want to raise any red flags at all. We don't even claim a home office even though my husband does work in a dedicated basement home office that meets every specification by the IRS. We just don't want to invite questions, so we skip it.

We do, however, look for every legal shelter and loophole that we can find. We pay far too much in taxes.

 

[MAKmom]

Have you seen the new Turbo Tax ad? It shows you getting a $14.00 deduction for donating jeans Is that true?

 

[connorlevismom]

I would never screw with the IRS, period.

Kristine

 

[mickeyfan2]

Have you seen the new Turbo Tax ad? It shows you getting a $14.00 deduction for donating jeans Is that true?

I laugh at that too!!!

 

[jgmklmhem]

I won't say we cheat, but I know for a fact that the mileage driven for medical purposes I used to calulate the medical deduction might not be entirely correct. I didn't record every trip's mileage we took to the hospital (about an hour away). I just used the Google Earth mileage which I feel is probably the quickest route so my routes might have been a little longer. Honestly reading through the "rules" I don't even know how to document the trips because my odometer doesn't do print outs or anything (not that anyones does). I could see people jacking up the miles. I just knew how many trips we took and then multiplied by the Google Earth mileage.

 

[mefordis]

No, we don't cheat. We own a small business so we're already high on the list to be audited. We don't want to raise any red flags at all. We don't even claim a home office even though my husband does work in a dedicated basement home office that meets every specification by the IRS. We just don't want to invite questions, so we skip it.

We do, however, look for every legal shelter and loophole that we can find. We pay far too much in taxes.

You should claim that home office. That is one of the great things about owning a business. I have an s-corp, and you bet I claim my home office. Now, my accountant said if you are filiing as an independent contractor, or self employed, it could be a red flag to claim a home office. But if you have a corp or llc, it is totally legit and shouldn't raise any red flags. I mean, you have to conduct your business SOMEWHERE, right?

Also, when you claim a home office, you get to claim part of your heat and electricity.

 

[momto2girls]

You should claim that home office. That is one of the great things about owning a business. I have an s-corp, and you bet I claim my home office. Now, my accountant said if you are filiing as an independent contractor, or self employed, it could be a red flag to claim a home office. But if you have a corp or llc, it is totally legit and shouldn't raise any red flags. I mean, you have to conduct your business SOMEWHERE, right?

Also, when you claim a home office, you get to claim part of your heat and electricity.

We have an s-corp too. However, we evaluated it (DH and I are both accountants, plus we consulted with a tax accountant) and decided not to claim the home office. It is tempting, but we are concerned about it being a red flag and just don't want the trouble. It would certainly be nice of course, but for now we are skipping it.

 

[mefordis]

We have an s-corp too. However, we evaluated it (DH and I are both accountants, plus we consulted with a tax accountant) and decided not to claim the home office. It is tempting, but we are concerned about it being a red flag and just don't want the trouble. It would certainly be nice of course, but for now we are skipping it.

If I may ask, what are your thoughts on e-filing vs paper filing? My accountant does not e-file because he said it makes it easier to target for an audit as well. Thoughts on this?

 

[mickeyfan2]

If I may ask, what are your thoughts on e-filing vs paper filing? My accountant does not e-file because he said it makes it easier to target for an audit as well. Thoughts on this?

For years our accountant said not to e-file for the reason you stated. 2-3 years ago he said to e-file since so many are sent in this way now and doing it by paper seemed like you were trying to hide something.

 

[mefordis]

For years our accountant said not to e-file for the reason you stated. 2-3 years ago he said to e-file since so many are sent in this way now and doing it by paper seemed like you were trying to hide something.

Ah, makes sense. Thanks! If you care to throw anymore "no-nos" or potential red flags my way, if any are on the top of your head, they would be much appreciated!

 

[Keli]

I work for a financial company that owns a bunch of tax preparer franchises.
Although I don't prepare taxes, as a matter of fact no one in our building does, I talk to our customers every day.
And you would be shocked at how many I find have cheated on their taxes and I'm not even trying to catch them!
The two most common things:
--People let others claim their children or they claim someone else's kids (earned income credit maxes out at 2 children so lots of folks will let their family members, mom, dad or brothers/sisters claim some of their children if they have more than two).
--Husbands and wives will each claim head of household and file seperately although they are legally married and live together.

 

[DISUNC]

This is probably the ONE thing I dont exaggerate on!

 

[aprilgail2]

Well I guess I would have to say "yes" to that. When my accountant asked me if I bought anything online I said "nope" since they want you to claim that and pay the taxes you owe on it! Other than that my taxes are pretty simple, childcare (summer camp) is about the only thing I have to claim.

 

[beckmrk04]

I have never even considered cheating an option when it comes to taxes. I can't even imagine the nightmare that could ensue. No thanks.

I'm with some of the other posters- I didn't even claim charity contributions because I don't have receipts, or can't find them- and I just don't even want to TEMPT the IRS. I mean, it's not like I gave thousands of dollars away, anyway- so I can't imagine that a charitable contribution would be worth faking in terms of how much of a deduction it would be unless you were literally giving away a large chunk of your income/goods/whatever.

 

[AKL_Megs]

No.

I don't have much free time, and I value the free time I have. I don't waste it keeping track of every last dime I give to Salvation Army, nor to I keep track of every last penny I spend on work related expenses.

It took me 10 minutes to do my taxes, and I am happy with what I am getting back.

End of story!

My FMIL, on the other hand, takes every little piece of junk to the Salvation Army ("You can write off ANYTHING," she says.) but she keeps track of none of it. I know for a fact that the crap she gives them isn't worth the thousands she claims on her taxes. She claims EVERYTHING that you can possibly claim.

I wish she would get audited one of these days.

 

[kribit]

No, I would be the one to get caught.

 

[Cheshire Figment]

I do not let any of my clients give me unsupportable numbers.

I do, however, have the policy of "take all questionable deductions". I will tell the client that the support and/or authority for the deduction is skirting a thin edge, and if they are audited that particular deduction may be disallowed and my guarantee will not cover it.

But they are aware ahead of time of the possible consequences.

I once had a client where we took the position of claiming a "business bad debt" while the IRS position was it should have been a "nonbusiness bad debt". I worked for several months discussing this with the auditor, but her case citations were better than mine. The amount was about $30,000 and when we finally surrendered he had to pay about $10,000 right away. He did not lose the entire deduction, but it had to be treated as a long term capital loss and spread out over several years.

Actually he remained a client for several years afterwards, until a promotion had his employer providing financial counseling and Income Tax preparation.

But I have walked away from clients who wanted me to make up numbers for them. Removed all papers that I had worked on and left.

My reasoning was that if a client was audited and it was found that there had been cheating they would then have audited all of my clients (which is not a nice thing to have happen) and I could have been not only fined but also barred from ever commercially preparing Income Taxes. At which time the DC Board of Accountancy would probably decided to revoke my CPA Certificate and my employer would have felt that I should not have a position of trust as a Federal employee anymore.

So I was not willing to risk my career for assisting a client to cheat on a tax return.

 

[Moonmom]

No way; I couldn't do it and not be ridden with guilt. I know people do.. and I'm sure alot get away with it..but I can't lie.
We've used the same tax accountant for a long time; frankly the stuff bores me..and since we have business income plus DH's other job expenses it gets more complicated that I'd want to deal with.
We trust our accountant..he's never suggested any "fudging" but he's also a detail person. One year I got the dreaded IRS notice in the mail..it referred back to a return several years prior and demanded immediate payment plus a fine for some error. I had visions of IRS agents coming to take me & DH away and taking our house and leaving poor DD homeless as she got off the school bus..confused: (I'm SUCH a worrywart!).. Called my accountant who told me to bring the notice down to him...and told me not to worry..that it'd be okay.
About 6 weeks later we got something in the mail that I was told was rare.. an apology letter from the IRS..it stated something like.."Your accountant..Mr. R.. was correct in his original calculation and we apologize for our error. Mr. R. was right and the return was prepared correctly and no further tax or penalties are due. We apologize for any inconvenience and commend Mr. R's clarification of the computations."
It's SO much easier being honest! I can work myself up into a tizzy worrying about things that I think might happen... if I had lied..then got a notice like that I'd probably be turning myself in for something they didn't even know I had done..just out of guilt!
PHEW... if I'd lied about

 

[Aidensmom]

No, I am honest to the penny.

There was one year where when I was doing a calculation on my hand held calculator, I apparantly didn't push one of the buttons hard enough, and it made my total tax refund come up to like $6 more than it was supposed to be. (I now use the computer to do my returns!) This was on a pretty basic 1040 using the standard deductions, and I think our adjusted gross was under $40,000. We were audited, and I got this big old letter telling us we were getting $6 less back.

Anyone can be audited, and anyone can be caught being dishonest. I would never do it purposefully, even if the chances of being caught were next to nothing. You owe what you owe.