8 Ways People Cheat On Their Taxes
Under-Reporting Cash Business Income
Many businesses accept cash payments. The owners of these business are often able to pocket a percentage of their sales as unreported income. A hairdresser, for example, might charge $7 for a haircut and then spend the cash on lunch instead of reporting it as business income.
Claiming Unreimbursed Employee Expenses
If an employee has a business expense which is not reimbursed by her employer, she can write that expense off as a deduction on her own taxes. Some tax filers claim personal expenses as unreimbursed business expenses. It is difficult to tell if the passport application fee a filer is claiming as an unreimbursed expense is for a legitimate business trip or for a personal vacation. The most common use (and misuse) of this deduction is to claim a deduction for vehicle mileage used on work-related trips.