No one enjoys paying taxes (probably). However, it is one of those necessary evils in life. And while you can certainly reduce the amount of taxes you have to pay, you can't falsify or avoid paying them.
No one enjoys paying taxes (probably). However, it is one of those necessary evils in life. And while you can certainly reduce the amount of taxes you have to pay, you can’t avoid paying them or falsify them.
Sometimes there isn’t anything nefarious going on: sometimes people just make careless mistakes on their tax return. Thankfully, these mistakes can be avoided, keeping more money in your bank account and less in Uncle Sam’s coffers.
April 15 is the tax deadline
This is a simple one. By not filing or filing late, you’ll be costing yourself a lot of money, because for every month that your tax return is late, you will owe 5% of the taxes you owe. According to H&R Block, not signing your return is the same as not filing it at all—and the same goes for your spouse if you file jointly.
But this penalty only applies if you owe money to the government. If you don’t? Then don’t expect to see your refund for a while. A refund can be delayed by months, and H&R Block warns that after a certain period (generally three years) the refund becomes property of the U.S. Treasury Department.
TurboTax warns that you might want to sharpen your math skills if you decide to forgo filing electronically and prefer pen and paper. If you pay less than you should because of a math error the IRS won’t let it slip—you’ll have to pay the full amount of taxes owed, plus any interest that accrues from the date of return.
Typically, tax evasion carries a maximum penalty of five years in prison and a $250,000 fine. But on top of that, you’ll be paying costs of prosecution and you’ll still have to pay any and all back taxes, according to H&R Block. There’s also a potential civil fraud penalty which is up to 75% of the underpayment, plus (you guessed it) interest.
The majority of Americans don’t try to cheat and lie on their tax return, but of course there are those who might try. Under-reporting income or excluding investment interest could land you three years in prison and a $250,000 fine.
Self-employed? Deducting the miles you put on your car as part of your job? If the IRS sees anything suspicious and wants to investigate further, you’ll have to provide a journal of every mile on your return, plus receipts for all other questions they have, according to TurboTax.
And if you can’t satisfy the IRS? There’s a 25% inaccuracy penalty on top of the additional tax, plus (of course) interest on the entire amount.
Donations of goods to charities need to have itemized receipts from the organization showing exactly what was donated, the condition, a value and a signature. If there’s nothing specific on the slip, then you could be selected for an audit. On top of that, if the deduction is denied, then you will have to pay additional taxes, possibly an inaccuracy penalty and (one last time) interest on the entire amount.