Don’t Lie to the IRS — And 9 Other Things You Should Never Tell Them

Martin Dasko

With every tax season, there comes a new set of challenges and struggles as you try to complete your return on time. As you gather your critical tax documents to file your return, you’ll want to review what you should never tell the IRS. While you don’t want to lie on your tax returns, there are specific things you shouldn’t say to the IRS that we will examine in this article.

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Here are things you should never tell the IRS.

Report The Wrong Income

“The IRS can identify missing income and overstated deductions on your return,” said Moira Corcoran, CPA and tax expert with JustAnswer.

You don’t want to report the wrong income by hiding anything or underreporting. When it comes to reporting income, you can’t forget about any sources, such as:

  • Dividend income.

  • A side hustle.

  • Any stocks or cryptocurrency that you sold.

  • Any money that you brought in.

“The IRS will check for mismatches between your return and the information the IRS has on file (W2s, 1099s, 1098s, etc.),” warned Corcoran. “Then, they will send you a notice proposing more taxes, including penalties and interest.”

You don’t want to get caught lying to the IRS about your income because they likely have already received reports.

Find Out: Top 7 Countries with Zero Income Tax

Overstating Deductions

Corcoran stressed the impact of overstating your deductions on your tax return and the possible consequences. As tempting as it may be to pad your deductions to improve your tax situation, you must understand that the IRS may audit you.

The IRS acknowledges that taxpayers can make mistakes when determining their earned income tax credit, child and dependent care credit, child tax credit, and other deductions. However, they urge people to use tax software to calculate the proper credits and deductions.

Overstating deductions can apply to inaccurate business expenses or to applying for tax credits that you don’t qualify for. Even though you want to claim your home office or add up your expenses, you don’t want to get carried away.

Repeatedly Make The Same Mistakes

“If there’s a history of mismatches, the IRS will most likely pick you for an audit,” commented Corcoran. “They can open several years of returns to audit. Audits can be expensive and take a long time to complete.”

While it’s understandable that you could make a mistake when reporting income, estimating business expenses, or applying for too many credits, you don’t want to make the same mistake repeatedly.

Corcoran concluded with a word of caution:

“If the IRS thinks you intentionally lied, there are additional penalties. Depending on the materiality of the lies, the IRS can charge you with civil and criminal penalties.”

Unnecessary Small Talk

If the IRS contacts you, it’s essential that you only discuss the relevant matters. You don’t want to overshare or provide irrelevant information that could hurt your case. You also want to ensure that you have your tax documents prepared so that you can present the information when requested.

Blame Someone Else For Poor Guidance

You’re ultimately responsible for your own tax situation, so you can’t try to defer blame when speaking with the IRS. When you file your taxes, you sign off on the accuracy of the information.

Audits can be stressful and time-consuming, so it’s crucial that you hire a trusted professional to help you out in the first place.

Agree to a Payment Schedule You Can’t Afford

The IRS’s proposed payment plan should be a mutually agreeable solution. If you agree to a plan you can’t stick to, you could create issues for yourself. This means that you should be cautious when accepting a payment plan because you could end up in a stressful situation.

Answer Questions You Don’t Understand

If you don’t understand a question, you’ll want to consult with a tax professional. If you’re self-employed or have a complex tax situation, you’ll want professional guidance so you don’t answer incorrectly. The general advice is to avoid answering questions you’re unsure about until you get the correct assistance.

Ignore The IRS

One of the worst things you can do when dealing with the IRS is ignore their notices. If you receive an LT11 or LT1058 notice, you should take this correspondence seriously. The LT11 is a warning that steps will be taken with your tax return. The LT1058 is another reminder that you could request a hearing about your unpaid taxes, but that action is necessary.

Since the IRS charges interest on unpaid taxes, you should not ignore the correspondence; doing so will only cost you more money.

Get Rude In Your Communication

You don’t want to get rude or upset when communicating with the IRS because this will not help your case. While dealing with tax audits can be frustrating, you don’t want to make the matter worse by engaging in rude conduct that could only hurt your case more.

Lie About Anything

Based on the law, 18 U.S.C. Sec. 1001, being untruthful to any government entity can be considered a serious crime with varying penalties. You want to do your best to present everything accurately, even when it’s tempting to exaggerate.

Closing Thoughts

While filing taxes can be stressful at times, you don’t want to make it worse by saying the wrong thing to the IRS. As always, we recommend working with a qualified professional to follow the process properly. You don’t want to let incorrect information lead to hefty financial penalties that could put you into debt.

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This article originally appeared on GOBankingRates.com: Don’t Lie to the IRS — And 9 Other Things You Should Never Tell Them

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