For those of you cheat on your tax return...

[Anonymous]

Anonymous wrote:I think every lax dad I know write their travel to tournaments off as a business expense.

as told by their accountants

[Anonymous]

Anonymous wrote:

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Anonymous wrote:Perhaps you don't realize this but it is very difficult for wage earners to cheat on their taxes in a material way. Almost all of your income is going to be reported to the IRS (i.e. W-2, 1099, etc.) so there is very little tax evasion in this income group. Brokerages track the basis for securities now so that one loophole has mostly been closed unless you've owned securities for a very long time.

The vast majority of tax evasion comes from the 1%.

Perhaps you don't realize this but cheating is very common among those paying low/ no taxes. Think about all those tips or cash transactions. Think about highly-questionable benefits or child credits. That's a huge pot of money the IRS could well go after.

1) They already go after this group the most.
https://www.cbsnews.com/news/where-does-the-irs-audit-the-most-poor-rural-counties-that-are-mostly-black/

2) Refundable credits like the EITC and the CTC are the most scrutinized at the IRS, and are the easiest to audit.

3) The money from these audits is not a lot bc these people don’t have a lot. Audits of wealthier people result in more tax even with the increased costs.

1) Not true, not even by a mile (and the report in the very link you provided shows why)

2) Easiest to audit: Yes. Most scrutinized: not by a mile

3) You don't understand volume. 20 million people x $500 = $10 billion in easy-to-get tax dollars. That's more than fighting 10 billionaires to death and getting $500M from each -- which rarely ever happens to begin with.

+1

I don't see why people don't get this. Small amounts from millions of people usually adds up to a much bigger amount than a large amount from one individual.

I see this in discussions of corporate pay. Reducing a CEO's pay by $10 million and spreading that over tens of thousands of employees does not result in a noticeable pay increase for any employee. Same principle at work as above.

(Not meant as a defense of executive management pay--current practices have many problems, but it is generally not the root of low employee pay.)

Math is not one of America's top talents.

Don't be obtuse. People get the math; they just don't like the inequity.

There's also a chilling effect of tax audits beyond the money. Auditors could randomly select a few common ways of cheating taxes among the wealthy and pour all their resources into prosecuting those types of cheat that year--rather than flagging individuals focus on anyone who has used a certain kind of process, audit a random percentage of those and look for cheating. And then publicize the heck out of it. The next year randomly select strategies again. They will reduce people's willingness to roll the die on using various strategies. The benefit is both money AND feeling like you live in more fair society when the wealthy are subject to the same scrutiny as the poor.

Same with CEO pay--sure everyone gets that the pay of 1 won't meaningfully spread to the many. It's optics and the sense of fairness. Plus there are likely cascading effects if the CEO gets less, the upper eschelon will likely also make less, until you get to a place where it's easier to bring the lower people up rather than bring the higher people down. Soon enough the compression makes it a least a little more equitable (sort of like it was in the mid 20th century.

[Anonymous]

Small business owner here: I never cheat on my taxes. It isn’t worth the risk. I do very little cash, though…I often pay small business owners in cash. Not my circus and we struggle hard enough, if someone has a different philosophy that’s on them.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think every lax dad I know write their travel to tournaments off as a business expense.

as told by their accountants

Yes, there are lots of crooked accountants out there to help service crooked small biz owners.

I’m ok if all these clowns get audited.

[Anonymous]

I'm not even sure why all of us W2 employees need to file a tax return. My employer, bank, brokerage, and title company all send copies of my tax documents to the IRS. I'm forced to do data entry in TurboTax just to tell the IRS what they already know and if I make a mistake their automated system sends me a notice.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Perhaps you don't realize this but it is very difficult for wage earners to cheat on their taxes in a material way. Almost all of your income is going to be reported to the IRS (i.e. W-2, 1099, etc.) so there is very little tax evasion in this income group. Brokerages track the basis for securities now so that one loophole has mostly been closed unless you've owned securities for a very long time.

The vast majority of tax evasion comes from the 1%.

+1 op clearly has no idea what they are talking about. Banks, brokerage houses and employees report income directly to the IRS so if something doesn’t tie out, there’s a notice. It’s very hard to find ‘loopholes’.

You've never met self-employed people who deduct their whole life? Or get paid partially in cash?

Hi, self-employed person here. I generally don’t have enough things to write off to take anything other than the standard deduction. I did try out itemizing my taxes for a few years and it was more work than it was worth. You do still need documentation for all of these write offs/deductions. Cash payments are not a large part of my business, because everyone else wants a receipt for their own expenses as well.

I was talking about Schedule C, the business expenses deducted.

[Anonymous]

Anonymous wrote:I'm not even sure why all of us W2 employees need to file a tax return. My employer, bank, brokerage, and title company all send copies of my tax documents to the IRS. I'm forced to do data entry in TurboTax just to tell the IRS what they already know and if I make a mistake their automated system sends me a notice.

Exactly. And I pay TurboTax for the privilege of doing it.

[Anonymous]

As W-2 wage earners there really is no ability to cheat. I guess maybe the charitable deduction itemizing, but that would be minimal unless you want to trigger an audit where you need proof.

I have a lot of family in the restaurant ownership business, they definitely cheat. Less so these days with a higher use of credit. When one of my cousins passed away they had wads of cash hidden in the back of a freezer, so dumb would have been better off paying the tax and investing it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Perhaps you don't realize this but it is very difficult for wage earners to cheat on their taxes in a material way. Almost all of your income is going to be reported to the IRS (i.e. W-2, 1099, etc.) so there is very little tax evasion in this income group. Brokerages track the basis for securities now so that one loophole has mostly been closed unless you've owned securities for a very long time.

The vast majority of tax evasion comes from the 1%.

+1 op clearly has no idea what they are talking about. Banks, brokerage houses and employees report income directly to the IRS so if something doesn’t tie out, there’s a notice. It’s very hard to find ‘loopholes’.

You've never met self-employed people who deduct their whole life? Or get paid partially in cash?

I have but they're not a giant pot of money. They are however many individual pots of not that much money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Perhaps you don't realize this but it is very difficult for wage earners to cheat on their taxes in a material way. Almost all of your income is going to be reported to the IRS (i.e. W-2, 1099, etc.) so there is very little tax evasion in this income group. Brokerages track the basis for securities now so that one loophole has mostly been closed unless you've owned securities for a very long time.

The vast majority of tax evasion comes from the 1%.

+1 op clearly has no idea what they are talking about. Banks, brokerage houses and employees report income directly to the IRS so if something doesn’t tie out, there’s a notice. It’s very hard to find ‘loopholes’.

You've never met self-employed people who deduct their whole life? Or get paid partially in cash?

Where little business is happening with cash these days so I doubt if that can't be tracked.

[Anonymous]

Anonymous wrote:I do incredibly well. Numerous businesses, commercial real estate and residential real estate. I lawfully net about $4M in taxable income on my personal return (after maybe $500k in dedeuctiobs) and have (with a steady increase) for years.

I would never cheat on my taxes and never have. I already make more than anyone could ever need so it seems pointless. I pay about $10K to have our personal taxes done (we file in 4-6 states annually plus federal). My businesses pay another $20-30k in tax preparation annually. I could cheat if I wanted since it’s largely self reported. My federal taxes exceed $1M and state taxes are around another $400k or so.

What's your main business other than the REs?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I'm not even sure why all of us W2 employees need to file a tax return. My employer, bank, brokerage, and title company all send copies of my tax documents to the IRS. I'm forced to do data entry in TurboTax just to tell the IRS what they already know and if I make a mistake their automated system sends me a notice.

Exactly. And I pay TurboTax for the privilege of doing it.

The IRS would be happy to do that but the software cos and CPAs lobby strongly against it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think every lax dad I know write their travel to tournaments off as a business expense.

as told by their accountants

Yes, there are lots of crooked accountants out there to help service crooked small biz owners.

I’m ok if all these clowns get audited.

Me too. Usually it’s the arrogant SOB’s who cheat on taxes. Can’t wait to see all the a-holes getting audited.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Perhaps you don't realize this but it is very difficult for wage earners to cheat on their taxes in a material way. Almost all of your income is going to be reported to the IRS (i.e. W-2, 1099, etc.) so there is very little tax evasion in this income group. Brokerages track the basis for securities now so that one loophole has mostly been closed unless you've owned securities for a very long time.

The vast majority of tax evasion comes from the 1%.

+1 op clearly has no idea what they are talking about. Banks, brokerage houses and employees report income directly to the IRS so if something doesn’t tie out, there’s a notice. It’s very hard to find ‘loopholes’.

+2. IRS sent a letter couple weeks ago to ask for $79 and change 'owed tax' for year 2020. yeah, almost thought that was a scam.

I got a small one as well, under $100, due to a from from my brokerage that was amended after I filed.

[Anonymous]

Anonymous wrote:Perhaps you don't realize this but it is very difficult for wage earners to cheat on their taxes in a material way. Almost all of your income is going to be reported to the IRS (i.e. W-2, 1099, etc.) so there is very little tax evasion in this income group. Brokerages track the basis for securities now so that one loophole has mostly been closed unless you've owned securities for a very long time.

The vast majority of tax evasion comes from the 1%.

And EITC fraud. Although that’s not tax evasion, just fraud.