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How Many Americans Will Cheat on Their Taxes This Year?

It seems that most Americans would rather lie on a resume than a tax form. Rough estimates calculated that only 6% of Americans cheat on their taxes, whereas roughly 85% of Americans are lying on their resume.

When tallying up the year’s tax totals, it seems that most Americans are also calculating the risk-versus-reward and deciding it’s better to stay on the up-and-up.

Why is this? Are we becoming a more honest people, or is the cost of getting caught too high?

Don’t Lie to the Tax Man

According to a 2017 IRS survey, the majority of Americans (88%) say it is not at all acceptable to cheat on taxes; this ethical attitude is not changing over time.”

The same survey also revealed that honest paying behavior is strong and more common in people 35-years-old and older.

This means that almost 9 out of every 10 Americans are driven more by their own system of values than the possibility of being caught lying.

However, the repercussions are certainly there. First of all, just hearing the word “audit” is likely enough to cause a visceral reaction to keep most Americans on the straight and narrow path.

But, he penalties are very, very real, as people who are caught cheating on their taxes may be found guilty of a felony and face up to five years in prison and $250,000 in fines.

That price is simply far too high, and in the days of machine learning and AI, it is likely becoming too easy to get caught.

What Do People Lie About on Their Taxes

For those who are fudging the numbers, the most common things they lie about are:

  • Failure to report income: This includes under-reporting, or not reporting, side income outside of their declared salary
  • Phoney deductions and credits: This may include overvaluing donated goods
  • Omitting Tips and Gifts Received: This is most common among servers, obviously
  • Paying Others “Under the Table”: This may include maids or housekeepers. If you paid at least $2,000 in annual wages to a household employee and withheld payroll taxes, you have to file it
  • Not Declaring Gambling Winnings: All of these winnings must be reported as “other income” on line 21 of your 1040 form.

In most cases, people will lie or stretch the truth for these numbers, assuming that it’s difficult to prove or disprove.

How Does The US Stack Up to Other Countries?

Americans do seem to be a relatively honest bunch when it comes to paying their taxes.

This can be measured with the voluntary compliance rate (VCR) for a nation. The US’ VCR ranges between 81 and 84%, year to year, without any large spikes or lulls.

This is compared to:

  • Canada has reported a VCR of 92%
  • Germany has a reported VCR of 68%
  • Italy, even lower with a VCR of 62%

We will see what 2018’s tax numbers will show, but it is not expected to be much different than years past.