Tax Evasion 101

Committing tax evasion is easy, anyone can do it. But that hardly means anyone should. So this article is instead about how you can avoid the harsh, justified penalties associated with tax evasion. Hint: the first thing you should do is not try to evade your taxes.

Doing your taxes can be deeply intimidating, but that is not much of an excuse for leaving information out of or not completing your filing. While the IRS does not pursue every single case it gets, hoping to be the one that gets looked over is asking for jail time. Instead, you should do everything you can to make your taxes less intimidating. Keep track of all the documentation you need, employ a qualified third party to help with the filing process, etc. Two key practices for keeping your taxes in proper order are double-checking everything you include, and including all of your income. This includes your primary source of income, any side jobs or gigs you work, and any passive incomes you receive.

The IRS typically takes less extreme collection actions before it levels tax evasion charges. Audits are the main tool for this purpose. An audit is a review of a tax return with the objective of finding conscious errors –– mistakes or omissions that have been made knowingly. In some cases, this can mean reviewing multiple tax returns, to see if the same error was made for multiple years in a row. This kind of repeated mistake tends to be held as tax evasion, as are repeated false statements and hiding documentation. Additionally, you may be found guilty of tax evasion if you avoid filing a return with the IRS for multiple years when you meet the filing requirements. Even if you are not, there are other penalties associated with this situation if the IRS seeks to resolve it.

To reiterate: the worst thing you can do with your taxes is leave them incomplete. No matter how difficult it is, it is always best to stay on top of your tax returns and stay informed about any relevant changes each year. And to further reiterate: there is always help available if you need it.