What Do You Know About Committing Accidental Tax Fraud?

You would never lie on your taxes or go out of your way to avoid paying what you know you owe, but you may still worry about committing accidental fraud. How do you stay on the IRS’s good side?

Yahoo! Life explores examples of unintentional tax fraud. Avoid these actions during tax season and throughout the year.

Claiming the earned income tax credit improperly

Before claiming the earned income tax credit, double-check that you qualify. Specifically, check the credit’s latest income limits. Also, Social Security benefits, child support, alimony and unemployment benefits do not count as earned income.

Submitting a return with wrong or missing details

With every tax credit you claim, include all supplemental documents. For example, if you claim the education tax credit, you must include Form 8863 with your return. You also need accurate information on your forms, such as your Social Security number. Otherwise, you could face an avoidable audit.

Taking advantage of tax shelters

Use tax shelters with the utmost caution, and take tax shelter recommendations from wealth planners and accountants with a grain of salt. If the IRS feels you abused a tax shelter, you may face back taxes and penalties.

Neglecting to report all income

If your job or gig pays you in cash or tips, you must report everything you receive. Even if the IRS does not accuse you of tax fraud, it could find you guilty of failing to supply essential details. Keep careful track of all your tips.

You do not want to face an unnecessary white-collar crime charge. By understanding what the IRS considers tax fraud, you keep yourself out of legal trouble.