Sometimes when I fill out my taxes (or a w4, for example) I feel like I am guessing. Is there some sort of review process for this? If I check the wrong boxes (Like- am I head of household if I am in college and still mostly financially dependent?) are there any kinds of fines I could face? How is this enforced?

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Posted by Hannah Gold (MONEY FORUMS: 6, Answers: 5)
Asked on February 29, 2016 12:38 pm
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Hi Hannah,
Thank you for posting your question. An incorrect filing status or exemption on the W-4 election can always be rectified when you prepare the tax return for the corresponding tax year. The consequences for making these same errors in the return, however, can have negative consequences for you. The filing status, along with the income bracket, affects your tax rate. If you put yourself in a filing status that results in higher taxes, you would be giving away free cash to the IRS. If, on the other hand, you put yourself in a filing status that results in a lower tax rate, you would be underpaying your taxes, which can result in high penalties and interest on the underpayment amount. The IRS have several methods to identify discrepancies in tax returns, some of which are systematic. Also, note that if the discrepancy is deemed to be fraud, there is no statute of limitation – the period the affected tax return can be subject to an audit does not “expire”. My recommendation is to have your tax return be reviewed or prepared by a CPA or other tax professional.

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Posted by Ramona Cedeno (MONEY FORUMS: 0, Answers: 5)
Answered: March 2, 2016 11:34 pm