More Americans think it's OK to cheat on their taxes

[bjl584]

More Americans say it's OK to cheat on taxes- MSN Money

[disneysteve]

It is so easy and there are so many ways to "cheat" on your taxes that I doubt that anyone pays every single penny that the law says they should.

[GREENBACK]

Tax laws are complicated enough that you sometimes "cheat" without knowing it.

[GrimJack]

It is interesting that there is an increase in cheating while the chances of getting audited are increasing. There are some pretty complex routines in play to spot possible cheating/fraud.

Along those lines, there were over 350,000 cases of ID theft on tax refunds last year - up from 50,000 the year before. The fraud/ID theft routines are getting their shake-down now as most ID theft happens between Jan 17 and Feb 17.

[Tonyall]

Tax laws are complicated enough that you sometimes "cheat" without knowing it.

That happened to me last year. I had missed filing a K-1 for my LLC. Even though not filing them did not make one spec of difference on my taxes and the company was at a operating loss, they hit me with a nearly $1600 fine!

I called them and they told me I could file an appeal. While I was waiting for an answer, I suddenly got a registered mail saying the IRS could start seizing my assets the following day!

I called them again and they said they never received anything from me (I had mailed it). The woman I talked to that time seemed a lot nicer. She told me to fax in the k-1 and ended all my problems right there without any kind of a fine.

Shows the kind of power the IRS has.

[moneybags]

It is so easy and there are so many ways to "cheat" on your taxes that I doubt that anyone pays every single penny that the law says they should.

Many people do. I did taxes for 10+ years. I would disagree that with your comment, as many people fear the IRS and want their taxes done correctly. I even had a few clients that were honest about cash earnings they had from little side jobs.

[disneysteve]

I even had a few clients that were honest about cash earnings they had from little side jobs.

I think those clients are probably the exception. Half the reason so many people take cash jobs is to avoid paying taxes. That's why the employer pays people "under the table" as well, to avoid the employer-based taxes.

I know plenty of people who do at least something to limit the taxes they pay. It might be under-reporting income. It might be failing to report cash income. It might be overestimating charitable donations. There are dozens of ways to cheat if you want to and there is virtually no way for the IRS to catch any of it. If I say I gave $100 worth of goods to Goodwill, how can the IRS disprove that? If I go around and mow lawns and earn $500 cash and never deposit it in a bank account, how would the IRS know? If I hit a jackpot of less than $1,200 at the casino, there is no record of it. Do you really think most people report all of that stuff? I certainly don't think so.

[moneybags]

If I say I gave $100 worth of goods to Goodwill, how can the IRS disprove that? If I go around and mow lawns and earn $500 cash and never deposit it in a bank account, how would the IRS know? If I hit a jackpot of less than $1,200 at the casino, there is no record of it. Do you really think most people report all of that stuff? I certainly don't think so.

If you donate goods, you should be taking a picture of what you donate and keeping it with your tax records. In case of an audit, this is your best protection. In an audit, it is never up to the IRS to disprove anything, it is up to you to prove your income/deductions.

And for the people getting paid cash under the table, they better be saving their money for retirement, because they aren't getting credit with social security for those cash earnings.

For the employers paying employees in cash, they better hope they never get audited. I know someone that did and it caused him financial ruins. While many are getting away with cheating, many are not.

Sorry, I believe in honesty, and tax fraud is something that really irks me.

[Joan.of.the.Arch]

Does the IRS say that we must have photos of those donations? I make a list with description, size, condition and then also get a receipt from Goodwill/ Vietnam Vets/ AmVets/ St. Vincent dePaul. There is a nearby charity I skip because they have unattended boxes and so no receipt. But I must also have photos?

[moneybags]

Does the IRS say that we must have photos of those donations? I make a list with description, size, condition and then also get a receipt from Goodwill/ Vietnam Vets/ AmVets/ St. Vincent dePaul. There is a nearby charity I skip because they have unattended boxes and so no receipt. But I must also have photos?

No, they do not require photos, but many people do it.

[BuckyBadger]

I wonder what they consider to be "cheating," though. Are loopholes cheating? (i.e. backdoor Roth for high income earners.)

I say a loophole is exactly that -- a loophole. But I'll bet a lot of people would say that taking advantage of loopholes is "cheating."

[J. Spence Financial]

I do taxes and I must say people better start watching it. The IRS has a lot of autmated systems that check for issues. A lot of people also don't know that the IRS already has your tax documents before you get them. If you don't report something like a small W2 or 1099, you bet they will ask you abou it.

[disneysteve]

A lot of people also don't know that the IRS already has your tax documents before you get them. If you don't report something like a small W2 or 1099, you bet they will ask you abou it.

I always report W2 and 1099 income. What I wonder/worry more about is income that doesn't generate a 1099 since companies only issue them if you've earned more than $600 from them. I do surveys for probably 30 different companies and only 2 or 3 reach the 1099 threshold each year. I may get as little as $5 from a company or as much as a few hundred. Does the IRS have any way of tracking what I've earned if no 1099 was sent in by the company?

And then there is always ebay and half.com sales. What's the status of those at this point? Does the IRS get any report of what I've sold during the year or is it still an honor system?

[2bfrugal]

Interesing conversation.
I do full time daycare. I report what I earn. But one of my parents reported she paid me far more than she actually did, as she wanted a bigger deduction on her taxes.
I photocopy all checks I get. Her child didn't start coming to me until Oct, but she entered a full years of expenses paid to me, under my social security number. she got audited and the irs came to me for a copy of her records.

[moneybags]

I may get as little as $5 from a company or as much as a few hundred. Does the IRS have any way of tracking what I've earned if no 1099 was sent in by the company?

And then there is always ebay and half.com sales. What's the status of those at this point? Does the IRS get any report of what I've sold during the year or is it still an honor system?

The IRS could audit a company that paid you $5, and it could lead to a tracing of that payment. While they don't directly have the information if it does not come through the 1099 or W-2, it could be exposed via an audit of the company that paid you (not likely, but possible).

They also have the right to all of Ebay's records if they want them. It would be so easy to get an Ebay report of sellers and their revenue. I would not be surprised to see this happen in the future.