If you are like many Minnesotans, you may find filing and paying your taxes confusing. The process involved in doing so can prove highly complex, and many people make errors unintentionally and out of negligence, rather than malice or an intent to commit fraud. Some tax-related errors are far more common than others, and recognizing what some of these common tax errors are may help you avoid unknowingly committing tax fraud.
Per GoBankingRates.com, a common error in filing taxes involves claiming incorrect, or inflated deductions. For example, if you are traveling for business, you may be able to deduct certain expenses for food, lodging and so on. If, however, you have your whole family traveling along with you and you deduct all meals, entertainment and related expenses, you can expect the Internal Revenue Service to have some questions. Inflating your deductions, too, can land you in trouble. For example, if you work in your basement and use it for nothing else, you can utilize the home office deduction. If, however, the space also doubles as your family room, you cannot legally take advantage of this deduction.
Another common taxpayer error that can land you in serious trouble involves incorrectly claiming the Earned Income Tax Credit. You must have a specific income level to qualify, however, and if your income is above the limit and you try and claim it anyway, you can expect this to raise a red flag with the IRS.
If you are a server or bartender who only reports some of your tipped income, you may also be committing tax fraud. The fines associated with doing so can prove considerable, so make sure to report all your tipped income. Some people falsely believe that they only must do so once they earn certain amounts, but in truth, you must record any compensation you earn.
This information about tax fraud examples is informative, but it is not a replacement for legal advice.