Tax Scams You Should Avoid

We are all familiar with the old adage, "There are only two things in life that are guaranteed: death and taxes." While every citizen files taxes each year, some of us are more familiar with the process than others. Accurately and correctly filing taxes is important and mistakes, even innocent ones, can lead to anxiety-inducing audits and monetary fees. Below I have complied some of the more common "Tax Scams" that you should be avoid while filing your taxes.

1. Frivolous arguments: It is a common misconception that you can get gain hundreds of dollars on your tax refund by filing for loopholes and tax liabilities. The IRS has an entire page on their website dedicated to "frivolous tax arguments" that should be avoided completely when filing. You can get the maximum amount of money back on your taxes without making exaggerated claims. Furthermore,  filing frivolous claims can result in a $5,000 penalty from the IRS. 

2. Income Tax Schemes: Abusive tax structures are essentially plans to avoid paying the taxes you legally owe by concealing your true financial situation. This is primarily achieved by trying to disguise your ownership of expensive assets by using shell companies or foreign financial accounts. If you become involved in an income tax scheme and are caught by the IRS, you can face severe penalties. 

NB: It is important to remember that ignorance of the law is never a valid legal defense. If you are ever convicted of a tax-related crime, it will not work to plead ignorance that your actions were illegal as your defense. That is why it is important to work with reputable professions who can ensure that

3. Misusing trusts: Trusts have useful and valid legal benefits, but they can also be abused. Consult with a lawyer and/or tax professional before you commit any assets into a trust.