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The difference between fraud and negligence on your income taxes

Citizens are required to file income tax paperwork on their own. For those not trained and educated in accounting, this can be rather confusing and complex. While the Internal Revenue Service does not want you to make any mistakes, it's important to note that there is a big different between fraud and negligence. Some people are afraid that any little mistakes could lead to fines or even an arrest, but that's not really the case.

Generally speaking, the difference between the two is just intent. If you make a mistake by writing the wrong number in the wrong box, it's just that: a mistake. If you intentionally write in that you earned less than you did, perhaps even consistently reporting this lower earning throughout all of the paperwork, that could be viewed as fraud. Common examples of fraud include:

-- Tax evasion, which may be done by purposefully not filing a tax return for the year.

-- Filing a false return. This could mean intentionally putting in information that you know to be wrong, such as claiming you earned $20,000 for the year when you know you earned $50,000.

-- Not paying the taxes that you owe. Not all people get a return, and those who owe need to pay the IRS and the local government.

-- Intentionally making false or fraudulent claims. For instance, you may claim that you spent $40,000 on a company vehicle so that you can write off the expense, when you really bought the car for yourself.

If you've been accused of intentional tax fraud in New Jersey, it certainly could mean jail time and/or fines. It's very important to remember the difference between true fraud and negligence.

Source: FindLaw, "Income Tax: Fraud vs. Negligence," accessed Aug. 12, 2016

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