No, I haven't cheated on my taxes and I don't think I could ever bring myself to doing so. However, I have heard crazy statistics about how many people actually cheat on their taxes and its unbelievable!!

First of all, I wouldn't even know HOW to cheat on my taxes...

Second, if there are so many people cheating on their taxes, why aren't they getting in trouble? How is it that the IRS doesn't catch on??

They do catch us.

But with all the cutbacks, they can't audit everyone.

I heard a state a few years back that of the KNOWN cheaters (those that you can look at their returns and know they are cheating), only about 40% of those are looked into. So 60% of KNOWN cheaters get away.

Plus, that's not counting all of the people who cheat and its not caught without a more detailed audit.

Staffing issues/cuts is the reason many more people get away with it. Fund the IRS/CRA better, and you will get a lot less cheaters (or at the very least, proecute those that do).

Ways to cheat?
Many ways. Perhaps you can claim a deduction for your safety deposit box (assuming you didn't have one). Claim a spousal tax credit that you are not suppost to.

Back in the days of paper, people would add a line up wrong, so the total on the line would be less than it should be.

Actually, paper still exists today. Although I have been e-filling for a while. I think this year maybe I will file manually. Nah, E-filing is easier, lol.

Really? Wow.. that's pretty incredible! It makes sense though, why waste the time/money it takes to investigate and audit the people that are just taking the IRS for a few thousand dollars as opposed to the big dogs that are taking them for tens or hundreds of thousands of dollars.

I would bet that the biggest way to cheat (for the little guy, like me)is claiming the charitable deduction when not entitled. Of course this is small potatoes, the big cheats move assets off shore and hide various investments. It's a lot harder nowadays to claim personal exemptions that don't exist since everyone is required to have a SSN.

What about just saying that you paid more taxes than you really did?

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Originally Posted by kgb420

what about just saying that you paid more taxes than you really did?

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You could do that. Although that is such a blatent lie, odds are you will be caught. Since in that case, if you have paid more taxes, the money has already been remited to the IRS/CRA so they have on file how much taxes you have paid so far.

Another way to cheat is scholarship grants :
My university does not issue frorm 1099 for scholarship grants (and as I am not a TA/RA, I do not get W2s because I am not paid for services).
So I could not report it, but maybe there is a way for the IRS to know. So, I have always reported it.
But I guess this is another way to cheat if you're not honest.

I have an uncle that is an investigator with the Canada Revenue Agency...

He once told me that they really are only interested in going after situations where there is substantial recovery or blatant fraud involved.

I imagine there are probably different levels of auditing and investigation that go on as they process individual and corporate tax filings.