When it comes to filing your taxes, it is all too easy to make mistakes, but some mistakes or omissions can leave you facing considerable trouble and hardship. Misrepresenting your income or otherwise being less-than-honest when filing your taxes may constitute tax fraud, for example, which is a highly serious crime that brings with it equally serious consequences.
Even if you make errors on your taxes because of a lack of knowledge, rather than intentional malice, you could still wind up facing some serious repercussions for your actions. Just what type of trouble might you find yourself in, should you face accusations of tax fraud?
You may become the subject of an audit
No one wants to hear they have become the subject of an audit by the Internal Revenue Service. Essentially, this means you can anticipate that someone from the IRS will go over your tax return with a fine-tooth comb to uncover any omissions or errors you may have made along the way. If he or she finds any, you may wind up paying back taxes as well as fees, interest and possible fines. Your audit may also include a review of your other tax returns from the past six years, so it may serve you well to try to avoid the audit as best you can.
You may face fines, fees and even criminal charges
In addition to potentially facing fines for underpaying your taxes, if applicable, you may face additional late fees and interest charges for failing to pay your tax liability in full by the due date. While such expenses can be a burden, you may also face criminal charges for your actions. Tax fraud is a serious offense, and a conviction could potentially mean you have to spend years behind bars.
While these are some of the main consequences associated with lying on your taxes, you may also face additional repercussions. Underreporting your income may, too, make it increasingly difficult for you to secure loans for say, a car or mortgage down the line, because it may make it appear to lenders that you will be unable to repay the loan.