Let’s face it: filing taxes can be a tricky business. There are so many forms, options, deductions, write-offs, and the like to keep in mind that it’s easy to make a mistake and get in trouble with the law. One minor mistake can result in being accused of tax evasion or fraud, like David Stewart. However, more often than not, those accused of this do not intentionally lie about or cheat on taxes. Rather, they made minor mistakes unknowingly that caused them a lot of trouble in the long run. The good news is that these mistakes could all be avoided with some careful planning. Here are some tips for avoiding tax troubles:
1. Organize your finances – The more organized your finances are, the better. Keep a record of all of your receipts and expenses throughout the year. Be sure to separate personal purchases from business ones. You may want to use some apps or tools such as Shoeboxed to keep track of all of your receipts. Be sure to make copies of receipts for big expenses, too. And it always pays to have a backup just in case you lose the original receipt.
2. Ask questions – This may be one of the easiest and most important ways to avoid tax trouble. Ask questions about anything you don’t understand. Ask your employer which business expenses might be tax deductible. Check with human resources about what you should claim on your taxes and why. Ask your tax preparer what different terminology means and be sure to fill out each and every area of your tax forms as accurately as possible. Remember, there is no such thing as a stupid question – one answer could make all the difference in the world when it comes to filing taxes.
3. Consider hiring an accountant – Sure, hiring an accountant may cost you some money up front, but it can help you tremendously in the long run. You should especially consider an accountant if you are self-employed or have had a significant change in your income over the last year. Even if you normally do your own taxes, an accountant can double check all of your numbers for accuracy and ensure that you are claiming the correct amounts. Simply put, an accountant can protect you from getting into any tax trouble down the line.
Tax fraud and tax evasion are serious crimes that can really ruin the lives of people accused of them. Job loss, possible jail time, and a damaged reputation are just some of the negative consequences of tax evasion. By following these three tips, you can increase the accuracy of your tax forms and reduce your risk of making costly errors.