Though 199A is probably the most tempting avenue for cheating right now, it’s also the trip-up to avoid, he said. “The chance of getting penalties that are very hard to get abated is greatly increased,” Preusch said.
Cryptocurrency is another area that could attract cheaters. “The IRS is already actively seeking out ways to find people involved in these transactions who haven’t reported them,” Preusch said. “I can see the IRS and Congress treating these transactions in similar ways in a couple of years as [they do] foreign unreported income, which would have higher criminal implications.”
Taxpayers should never change a number that can be verified by a third party. “Wages, investment proceeds, third-party processed revenue amounts or dividends can all be verified by someone else and typically reported directly to the IRS,” MacCollum said. “If things don’t line up, you can expect a letter.”
“None of my clients have tried to rationalize behaviors when it’s come to an IRS audit,” Preusch said. “All said it was an honest mistake—or they blamed their spouse.”