In our previous blog post, we covered the first half of the most common tax scams of the year released by the IRS. As always, Fricke & Associates, P.C. wants to help you stay up to date on the best ways to avoid financial trouble and protect your personal information and finances. Being aware and informed is the best way to keep your future and assets secure. Explore the second half of the common tax scams every consumer needs to be looking out for:
1. Reporting Deductions Dishonestly—Falsely reporting expenses is a slippery and dangerous slope. There are steep penalties for those caught reporting their deductions dishonestly. Whether you report it dishonestly or you have an unscrupulous tax preparer do it, you are responsible. Never report higher business expenses, inflate charitable donations, or improperly claim tax credits.
2. False Charities—There are dishonest people who will try to use your charitable spirit to their advantage. Many of these fake organizations will look legitimate and may even use a name similar to an actual charity. The best way to ensure the charity is legitimate is to use the tools available on the IRS.gov website. Practice charity, but make sure your money reaches the cause you believe in.
3. Business Credit Claims—This issue happens when businesses try to claim credits which they do not satisfy the requirements for. If you are unsure if your business qualifies for a tax credit, you should ask for the advice of a professional. As tax experts, our team would be happy to help your company locate any available credits.
4. Avoiding Taxes Through Offshore Accounts—The IRS does not look kindly upon those who attempt to hide their finances offshore. If your tax preparer advises you to use offshore hiding, run away to a legitimate firm, such as Fricke & Associates, P.C. If you already have participated in offshore tax avoidance, it is better to go ahead and report the error in judgment and fulfill your tax-payer duties.
5. Unreasonable Tax Arguments—There are some individuals who will encourage taxpayers to avoid paying taxes by launching frivolous tax arguments in court. Not only do these arguments waste time and resources, but there is also a heavy fine for filing a frivolous tax return.
6. Abusive Tax Shelters—These tax avoidance schemes usually utilize trust funds, conservation easements, offshore accounts, and shell companies to hide income. If someone tries to offer you a tax shelter to avoid paying taxes, run away as fast as possible. When these abusive tax shelters are discovered, individuals involved will face heavy penalties, which could include back payment of taxes, heavy fines, and even imprisonment. Avoiding taxes is not worth wrecking your life and still having to pay those taxes back.
At Fricke & Associates, P.C., we are always looking out for your best interest. Our team will help you not overpay on your taxes through proper and legal means. If you need support with your tax returns, you can trust the experience and expertise of our team. Schedule a consultation!