Ellen Phillips Tax Tip: Pet owners, take note!
You may be able to deduct costs associated with your cat or dog when the animal is used for specific purposes. For instance, kitty cat keeps your business property free of mice, rats, and other vermin and, if proven to do so, is tax-deductible, according to GoBankingRates.com
Uncle Sam is a knockin' so we better be ready, 2016 tax return in hand. Even though the IRS no longer possesses the manpower to cast its auditing nets as far and wide as in the past, this is not the time to fudge a tad to increase your refund. Here are some pointers.
1. Here comes the audit. The IRS receives the same 1099s and W-2s you get, so they know if you underreport. Many in the service industry don't convey tips or other cash payments; unfortunately, if the government smells something amiss, the server might face an audit. (If this should occur, always ensure you're accompanied by a professional hired to protect you and your interests.)
2. Hand over your checkbook. Audits consist of the potential review of six years' worth of returns and, if the IRS flags just one issue, they can add penalties and fines for every year a separate problem - even an honest error - is discovered. To add insult to injury, if the agency finds any of us guilty of tax evasion or tax fraud, we're in for some serious fines. How does up to a quarter of a million dollars grab you? Whether we're rich or poor or somewhere in between, the IRS doesn't differentiate between income amounts or how much we underpaid taxes. Uncle Sam only cares that someone falsifies any info whatsoever on a return.
3. Do you understand your Miranda rights? An arrest could be imminent for that falsification as tax fraud is a felony punishable by up to five years behind bars. In fact, consequences for failing to report foreign banks and financial accounts might result in the culprit wearing prison orange for up to 10 years! I don't know about you, but to me, no amount of extra refund is worth the possibility of a up to a decade behind bars.
4. And, finally, lying on your taxes may prevent any future purchase of a major undertaking, such as home or car. Under-reporting income makes it appear you can't afford to pay monthly payments, for example. Additionally, if our income, as it appears on other paperwork like credit reports, shows some higher earnings amount denoting falsifying, not only do we face denial for the current loan but also for any large purchase in the years to come. Crime. Does. Not. Pay. Let's all be certain to accurately report our taxes.
Contact Ellen Phillips at consumerwatch@timesfreepress.com