3 Ways Tax Preparers Know You’re Trying to Avoid Taxes

Every year taxpayers try to give Uncle Sam the slip either by trying avoid, pull or even reduce taxes in not-so-honest ways.

This is where tax-preparers come in, thanks to their jobs being to catch fraudulent information that might be furnished by taxpayers.

Even though you might not be able to catch all the information that falls into this category, here are 3 ways by which taxpayers try to cut corners when it comes to paying their taxes:

#1: Income fraud

People who report lower incomes can not only reduce their tax bill but obtain unemployment benefits as well. Yet this can trigger a red flag especially if they claim for dependents as well. In a number of cases, some of them get paid in cash for the work that they do while others get state or federal assistance or even child support that is non-taxable. It’s tempting to not file your returns including the cash you’ve earned as this would mean paying a higher amount of taxes.

#2: Overseas investors

If you are a US citizen, you cannot get away with leaving any investments or income made abroad from your tax returns. Most if not all, filer thoroughly checks information given to them by customers if they have spent time abroad even if they haven’t generated any income either.

#3: False deductions

Claiming additional expenses is one of the ways filers try to deceive the IRS. Usually, these additional expenses are added after having a chat with the preparer with no supporting documentation. Sadly enough, without this supporting documentation, their chances of being audited increases substantially. Most preparers shy away from adding these expenses to tax reports because it can cause the IRS to discipline both the filer as well as the person who paid their taxes.