“Wesley Snipes has never had any intention to defraud the government,” the lawyer insisted. Among the details that have emerged at Snipes’ trial is that the IRS sets aside for extra scrutiny returns containing diatribes against the constitutionality of the tax system.
Surely, most people are too savvy to do that, but there are a host of other common errors that yank taxpayers off the money train and into an audit or even bigger trouble with the IRS.
1.) Math problems Stupid addition errors are among the most common mistakes submitted to the IRS. If you insist on doing your return by hand, check your addition with a calculator. Twice.
“It sounds plebeian, but the IRS tells us every year, ‘Watch out for this.’ It’s an easy thing you can do,” says Tom Ochsenschlager, the vice president for taxation for the American Institute of Certified Public Accountants.
2.) Taking advice from amateurs. Your cousin tells you can deduct your car costs if you make calls about work while driving. On one hand, Wow! On the other, your cousin works at the deli counter. Too-good-to-be-true tips sound that way for a reason and should always be checked with a professional. They move at viral speed through companies, families and the Internet.
“If you have one monkey, you have five monkeys following them,” says Cindy Scalisi, an enrolled tax agent in Santa Barbara. The IRS tends to notice large groups of deductible-heavy monkeys and investigate them.
3.) Guessing. Think keeping receipts and logging mileage is a hassle? Try being audited. If you guess at deductions, you will be always be off. Your figure might be so wrong that it attracts the attention of the IRS. Or it could be so wrong that you lose hundreds or even thousands of dollars that was rightfully yours.
“The secret to good record keeping is staying on top of it every day. Don’t expect to remember what you did today in a year,” says Bill Geideman, the chairman of the California Tax Education Council. “If you have a log, whatever you deducted becomes a very defensible thing.”