4 ms·

I completely understand what you're saying. Paying someone who is more of an expert than me is still better than me doing it myself. "Hey I did this in good f

by lolsal 6y ago

I completely understand what you're saying. Paying someone who is more of an expert than me is still better than me doing it myself. "Hey I did this in good faith and this company messed up, can we work this out without me going to prison?" vs "I didn't know."

projektfu 6y ago
The good news is that messing up your taxes because you didn't know what you were doing will not land you in prison. The danger is that you made a bad guess that requires you to pay a lot of tax you thought you avoided. For example, you wrote off something big using Section 179 that you shouldn't have. So your tax liability increases by $15,000 or something that you've already spent. Now you need a payment plan. Most calculation or categorization errors aren't "prima facie" evidence of tax fraud. In general they need to show intent to deceive. Most of the cases where I have seen someone being fraudulent they are going somewhat out of their way to do it. For example, not reporting cash receipts, just checks and credit cards. Paying their children as contractors even though they do not do any work. Recording only half of the haircuts they do and none of the tips. Claiming to have an unsuccessful business that doesn't exist yet loses money. People have to go out of their way to make their illegitimate books look legitimate and they usually fail to take into account that the IRS has seen it all before. Unfortunately for everyone, the IRS doesn't catch these things for several years if at all, so some get rewarded, some think they're fine when they're not, and some get hit by a huge tax bill. For the average person, if they make a bona fide attempt at doing their taxes correctly, and they make mistakes because they are not a seasoned tax accountant, the penalty will be back taxes, interest, late fees, and representation costs.
pfranz 6y ago
I believe TurboTax gets a lot of mileage out of stoking that fear.

by lolsal 6y ago

projektfu 6y ago

The good news is that messing up your taxes because you didn't know what you were doing will not land you in prison. The danger is that you made a bad guess that requires you to pay a lot of tax you thought you avoided. For example, you wrote off something big using Section 179 that you shouldn't have. So your tax liability increases by $15,000 or something that you've already spent. Now you need a payment plan. Most calculation or categorization errors aren't "prima facie" evidence of tax fraud. In general they need to show intent to deceive. Most of the cases where I have seen someone being fraudulent they are going somewhat out of their way to do it. For example, not reporting cash receipts, just checks and credit cards. Paying their children as contractors even though they do not do any work. Recording only half of the haircuts they do and none of the tips. Claiming to have an unsuccessful business that doesn't exist yet loses money. People have to go out of their way to make their illegitimate books look legitimate and they usually fail to take into account that the IRS has seen it all before. Unfortunately for everyone, the IRS doesn't catch these things for several years if at all, so some get rewarded, some think they're fine when they're not, and some get hit by a huge tax bill. For the average person, if they make a bona fide attempt at doing their taxes correctly, and they make mistakes because they are not a seasoned tax accountant, the penalty will be back taxes, interest, late fees, and representation costs.

pfranz 6y ago

I believe TurboTax gets a lot of mileage out of stoking that fear.