However, each year, as the IRS puts it, some people “fudge” their information. Falsely claiming deductions, expenses or credits on tax returns is serious, regardless of their type. The IRS notes that it happens with overstating deductions such as charitable contributions, padding business expenses, or including tax credits to which you are not entitled. Two big ones to watch? The Earned Income Tax Credit and the Child Tax Credit.
The IRS is also putting the public on notice that IRS automated systems are increasingly efficient, and they generate most IRS audits. The IRS can normally audit returns filed within the last three years. But not only three years are at risk. The IRS can add additional years for big errors or fraud. If being audited is not bad enough, the IRS warns about the penalties or worse.
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