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Could you be guilty of tax fraud?

Tax season is an annual headache for millions of Americans. Fraud or tax evasion can get you into serious trouble with the Internal Revenue Service (IRS).

Unfortunately, it's easy to mess up your tax returns. The tax system grows increasingly complex by the year -- and many people make mistakes that could be construed as fraud by an overeager IRS agent. For example:

1. Claiming the earned income tax credit illegally

The earned income tax credit is only available for certain people. Claiming it when you're not entitled is a major red flag for the IRS. Make certain that you're entitled to it before you take that credit.

2. Abusing self-employment deductions

Sole proprietors and family businesses sometimes take liberties with what they consider a business expense. Trying to claim a family vacation as a business trip or dinners out as "working dinners" will probably get you audited.

3. Inflating your legitimate deductions

If you keep a home office, by all means, you should deduct it. However, don't pretend that your corner office takes up half of the house. Make sure that all of your deductions are legitimate before you put those figures down on your tax forms -- or you may have a lot of explaining to do later.

4. Misusing tax shelters

There are a lot of shady tax "shelters" out there. (In fact, the IRS published a list of some of the worst every year.) If you're being offered a tax shelter like a micro-captive insurance scheme or anything else that seems wonderful, make sure that you're really aware of what you're buying into. Don't get caught up in anybody else's schemes.

If you're one of the unlucky .5 percent of taxpayers chosen for an audit, don't take chances on your future. The IRS might be inclined to treat genuine negligence as fraud -- and that's a serious issue. If you're worried about the possibility of a conviction for tax fraud, talk to an experienced attorney today.

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