According to NerdWallet's 2018 Tax Study, many Americans are missing out on certain tax-saving strategies because they think they're illegal. And, on the flip side, some Americans admit to using illegal strategies to cut down on their tax bill, such as not reporting "under the table" tips, exaggerating business expenses or claiming too many charitable donations.
NerdWallet also found that millennials, which the personal finance site defines as those between 18 and 34 years of age, are slightly more likely to have participated in illegal tax-filing activities than Generation Xers (aged 35 to 54) and baby boomers (aged 55 and above). But the share is under 10 percent for all age groups.
Here's the generational breakdown of seven illegal tax-filing activities:
Trying to cheat the system is not only wrong but can also result in a tax audit, which is when the IRS examines your financial records to make sure you filed your tax return accurately. And while the IRS often conducts audits based on suspicious activity, some audits are done randomly.
If the IRS finds any misreporting, you'll have to pay the recalculated return amount and any interest penalties.
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