5 Bits of Tax Refund Status Advice that Can Get you in Big TroublePublished:
Trying to improve your refund status? Don’t just accept every single piece of advice that comes your way. Some advice can get you into big trouble with the IRS or kill your federal refund status! Here are five examples of some of the worst advice you can follow:
1. Deducting Your Cell Phone Bill
Using your cell phone bill as a deduction for a better refund status might seem like a stretch, but if you routinely use it for business then it’s legit. However, many people get advice to up their phone calls from their business phone. The idea is to get a bigger deduction and better federal refund status by using it more.
This is not a very good idea to say the least. It seems like it might work on paper, but the IRS will check your return before giving out your refund status to verify all calls were just business. Remember you need to submit proof with your deductions to get the best refund status. If you were just calling friends to increase your bill, you’ll be found out!
2. African American Reparations
This scam comes up every year. Unscrupulous tax lawyers will convince African American taxpayers they could get a huge tax break and better federal refund status if they file for a slave reparation deduction. They tell these taxpayers they will file it for them if they pay them a small fee.
The only problem is this deduction doesn’t exist! The “lawyer” will pocket the fee and take off while the taxpayer gets no extra money on their federal refund status. Even worse, when the IRS catches it, they may be forced to pay a $500 fee. Don’t fall for this one!
3. Personal Expenses
Another silly bit of advice sometimes given to those who work from home is to deduct personal expenses for a better refund status. Often, they are told to try and include landscaping costs like tree removal or gardening. The idea is since you work from home your home is your office, and offices need maintaining. Unfortunately, this does not work most of the time. Trying to claim personal costs as business expenses is very dangerous and can hurt your federal refund status.
4. Just Don’t Pay
You may have run across someone like this before. Perhaps you’ve seen them on the news. They tell you how they haven’t paid taxes in years. The reasons why vary from ‘paying is voluntary’ to them wanting to stay ‘off the grid.’
There’s a reason you see these kinds of people on the evening news! They are either misinformed or part of a scam. No matter which, don’t listen to them. You’ll end up paying fines or going straight to jail! Make sure you file and maintain your federal refund status every year.
5. Engage in Foreign Transactions
Some taxpayers try to skate around paying taxes on their money by engaging in foreign transactions. They’ve been advised that the IRS can’t tax them if they go through outside banks and accounts. This way, they can trick the federal government into a better federal refund status.
Unfortunately for them, the IRS has their number. They have offshore partnership programs set up for just this very thing. If someone tries to trick them with foreign accounts, the records can be handed over with no effort. If you try this, you’ll end up with heavy fines, no federal refund status, or maybe jail time!