How Your Fellow Americans Cheat On Taxes

Federal Income Taxes, Tax Returns, Taxes

Have you ever cheated on your taxes? If so, you are in the minority – but you aren’t alone, either.

A new Credit Karma survey finds that 6% of American taxpayers have knowingly cheated on their taxes. The real total may be higher, since the survey only captures those who are willing to admit it.

Tax cheating manifests itself in many ways, according to the survey. Approximately 7% of respondents didn’t report any cash income or other money that they received under the table. Another 5% made the opposite claim – they paid somebody in cash or under the table and didn’t report the payment.

Padding numbers is another popular cheating technique – 7% admitted to claiming excessive tax credits or itemized deductions or increasing the number of their dependents. Another 5% did not report gifts or tips they had received, and 3% did not report their gambling winnings.

Tax cheating is not a harmless crime. It affects you indirectly via decreased government revenue. The IRS estimated that between 2008 and 2010, tax cheating cost the government an average $458 billion per year – money that could be put to better use.

Who do you suspect the tax cheats are? Most of us assume the cheaters are corporations and rich men.

Over 46% assumed the super-rich are more likely to cheat, with 29% saying the merely wealthy were more likely. (Perhaps we think that when you’re super-rich, you have enough money and good lawyers that you don’t have to cheat.) Middle-class taxpayers were considered the least likely to cheat, suspected by just over 11% of respondents.

Men were considered far more likely than women to cheat on taxes, by almost an 85% to 15% margin. Corporations fared little better, with 68% of respondents expecting corporate tax cheating.

It’s more likely that you’ve cheated in some other aspect of your life as compared to your taxes. One-quarter of survey respondents admitted cheating on a test, 20% have cheated in a trivia game or something similar, and 8% have stiffed some form of public transportation. Over half of respondents (56%) admitted to cheating on a diet – although we suspect that should be closer to 100%.

A surprising one in five respondents said they had cheated on a spouse or significant other, even though they understood the degree of betrayal. Almost 82% of respondents considered being unfaithful as worse than cheating on taxes.

We apparently have little tolerance for tax cheats, as 61% of respondents believe that all tax cheaters should face some type of penalty. Only one-third of respondents suggest that penalties should be based on the situation.

Cheating on your taxes can have painful repercussions. You could potentially go to prison and/or be assessed fines of up to $250,000. The IRS isn’t shy with fines – in 2016, the IRS assessed $12.1 billion in collective penalties for breaking tax laws.

Granted, the audit rate is very low. The IRS audited only 0.7% of returns in 2016 – although higher incomes are more likely to be audited. The 2016 audit rate was 1.7% for taxpayers reporting incomes of $200,000 or greater, and 5.8% at the $1 million income level or above. Even so, is that a chance you are willing to take based on the potential penalties?

Resist the temptation to cheat on your taxes and think you can get away with it. Just as with cheating on your spouse, you may get away with it for some time but eventually you’ll get caught and repercussions will be severe – in both cases. In one, you may be in the dog house, while the other will send you to the big house.

You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips.

Photo ©

Advertising Disclosure

Source link

Products You May Like

Leave a Reply

Your email address will not be published. Required fields are marked *