"Cheat" Your Way Out of IRS Tax Debt

The year of Cheats: This past year has seen high profile cases of tax evasion and in early 2009 Timothy Geithner, Tom Daschle, and Nancy Killefer, three of Obama’s top cabinet nominees, were revealed to owe the IRS big bucks. But that’s not stopping taxpayers from seeking creative ways to cheat while filling out their tax returns.

5 Ways to “Cheat”
The IRS is ramping up their collections efforts, $7.5 billions will be provided for enforcement in 2009. The IRS expects a return of investment of $6.5 to every $1.Their goal? They want to reduce the tax gap, the gap between taxes voluntarily paid on time and total taxes owed. This means if you cheat, the IRS is out to get you!

Smart Cheats- This isn’t to say there’s not way to play it smart and save money on your Tax Returns, just know how to play it safe if you want to keep the IRS off your back. Forbes recently wrote an article about "How to Cheat Like a Pro." Here's some of the highlights from the article.

1) Write-Off Business Expenses
You already know you need to keep receipts for every work-related write-off. But now you also need to keep a detailed explanation for why the item qualifies as a deduction. And keep in mind, this item cannot normally be used for anything other than work related purposes. Otherwise, feel free to get a little creative when it comes to business expense writes offs.

2) Work with Honest Professionals to “Cheat”
If your tax preparer is tempting you to cheat, look elsewhere in a hurry. When the IRS discovers your illegal actions both you and the tax preparer will be at fault. However, you should be willing to work with someone who will think outside the box to maximize deductions. Basically, you should work with an honest professional for cover when you decide to make more off-the-wall deductions.

3) Smaller Deductions
The more you make in deductions, the more you stand out to the IRS. Make as many deductions as you legally can, but try to keep things at a reasonable number. And keep in mind, the higher your income bracket the more likely you are to receive an IRS audit.

• If your income is under $200,000 your chances of any audit are 1 in 106
• By comparison, $200,000 and higher and your chances are 1 in 34
• Finally, 1 million and higher and your chances increase to 1 in 18

4) Advice about Offshore Accounts
Do you have an offshore account? Failure to disclose a foreign account is a felony, and the IRS in increasing their efforts to catch these offenders. They know they can make the big bucks by going after the big fish. Congress has increased rewards for offshore banks that turn in names. If you amend your returns to show the money you kept in offshore accounts before the IRS gets your name, you can avoid prosecution and penalties. Just make sure you hire a professional to work this out for you.

5) Take Advantage of Charity
Forget trips to goodwill, because it’s going to be harder to prove those old jeans you donated are worth $50 bucks. The IRS knows better. But if you’ve donated sums of $100 or more to charity, you need to keep more than canceled checks and receipts. These days to keep your bases covered you need the charity to write a dated letter acknowledging the donations.