The first of the year is coming up quickly, and with it starts a new tax season. At the end of the year, it’s the time when you can start verifying your income and gathering up receipts for expenses. Doing all of this, and keeping those documents, helps prove that you’re filing your taxes legally.
Some people find that the taxes they owe are higher than expected or that they’re very close to a cut-off point where they’d owe significantly less or even get a return. It can be enticing to leave a portion of your income out when you do your taxes, but doing that is like playing with fire.
Intentionally underpaying or not filing your taxes is called tax evasion. Tax evasion is illegal, and if you are caught, you could face serious criminal charges as well as financial penalties. Tax evasion is a federal offense.
What constitutes tax evasion?
Tax evasion can involve situations where a person has willfully not paid taxes. It can also apply to cases where a taxpayer fails to file a tax form or pays less than is owed by reporting their income incorrectly.
It is not tax evasion if a mistake was made on a tax form. For example, if you accidentally type in your W-2 information and show you earned $14,000 instead of $41,000, that could be a simple typo. Should you catch that before filing? Yes, but accidents do happen.
If you are accused of tax evasion, it’s important to have someone on your side to help. You will want to build a defense for your case.