This article was fact-checked by our editors and Christina Taylor, MBA, senior manager of tax operations for Credit Karma Tax®.
Cheating may be a staple theme of country music songs, but most Americans are not OK with cheating on their taxes, a new Credit Karma Tax® survey finds.
In fact, only about 6% of survey respondents said they have knowingly cheated on their income taxes. Which means that the majority, roughly 94%, said they’ve never knowingly cheated.
A recent Credit Karma Tax® survey of more than 2,000 Americans found that respondents are actually more likely to cheat on their diet, a test or even a significant other than on their tax return.
- What Americans are more likely to cheat on than their taxes
- Where Americans fudge on taxes
- Most likely to be tax cheats: Rich guys
- Consequences of cheating on taxes
- Better alternatives to cheating on your taxes
What Americans are more likely to cheat on than their taxes
Although Americans may be largely honest on their taxes, that doesn’t mean they’re above some cheating now and then. Survey respondents were nine times more likely to cheat on a diet than on their taxes — the majority of survey respondents (almost 56%) admitted to having cheated on a diet.
Survey respondents’ willingness to cheat in other areas also exceeded their willingness to fudge their taxes.
- 25% admitted they’d cheated on a test or exam
- 20% said they’d been unfaithful to a girlfriend, boyfriend or significant other
- 20% had cheated in trivia or another game
- 8% have taken the bus or train without paying the fare
Respondents had a definite perspective on what kind of cheating ranks the worst, with nearly 82% ranking cheating on a significant other or spouse as worse than cheating on your taxes.
That said, Americans may be still doing things that could get them into trouble with the IRS, the study finds.
Where Americans fudge on taxes
When it comes to their taxes, few Americans seem willing to run afoul of the IRS. However, some survey respondents still committed some filing infractions.
- 7% didn’t report cash income or money they made under the table
- 7% padded their number of dependents, itemized deductions or tax credits
- 5% omitted tips or gifts they received
- 5% paid someone else under the table or in cash and didn’t report it
- 3% neglected to report gambling winnings
Most likely to be tax cheats: Rich guys
As for who survey respondents thought most likely to cheat, the leading consensus was — those with the most money, and men.
More than 46% said they thought the super rich are more likely to cheat on their taxes, and nearly 29% said that the wealthy were. Companies were deemed the least trustworthy, with 68% of respondents saying businesses were most likely to be deceptive about their taxes.
Around 14% said they thought lower-income individuals would be more prone to tax cheating. The middle class was perceived as most trustworthy, with more than 11% saying they thought middle-class taxpayers would be more likely to cheat.
Millennials and men were perceived as more likely to cheat, at 41% and nearly 85% , respectively.
Consequences of cheating on taxes
“You might forget to report your scratch card winnings as income, or take a home office deduction when you don’t quite meet the criteria for it, but some of these mistakes routinely make the annual list of the IRS’ ‘Dirty Dozen’ tax scams,” says Bethy Hardeman, chief consumer advocate at Credit Karma. “Making these mistakes could have consequences — some of them quite severe.”
For example, it’s against the law to tweak your income on your tax return. Some people do this so they can qualify for tax credits or to pad your deductions to reduce your taxable income. Breaking tax laws can lead to fines. In fact, in 2016, the most recent year for which data are available, the IRS penalized individuals, estates and trusts to the tune of $12.1 billion.
Your finances might not be the only casualty of getting caught cheating on your taxes. You could potentially lose your freedom too. Tax fraud is a crime, and in 2016, IRS criminal investigations resulted in prison time for 927 cases. That’s the number of cases; the number of people jailed could be more if more than one person was found guilty in a single case.
Regardless of the possible financial and legal ramifications of cheating on your taxes, survey respondents largely seemed to view tax honesty as the right thing to do.
The majority (61%) of respondents said everyone who cheats should face repercussions, while 33% said it should depend on the situation.
Better alternatives to cheating on your taxes
“Some people may be tempted to cheat on their taxes because they hope to save some money,” Hardeman says. “But there are better ways to save some money or plan for your taxes.”
Some options for reducing your tax bill and maximizing your refund include the following:
- Contributing to retirement accounts such as a traditional employer-sponsored 401(k) or traditional IRA. These contributions can reduce your taxable income and could lower your tax obligation.
- Putting money into a health savings account if you have one. You have until April 17, 2018, to make contributions that could lower your taxable income for the 2017 tax year.
- Determining whether itemizing deductions (e.g., real estate and personal property taxes, investment interest, charitable donations, medical expenses, unreimbursed employee expenses and home mortgage interest) will give you a greater tax benefit than simply taking the standard deduction.
- If you have a college student in your home (or attend college yourself), checking if you qualify for the American opportunity tax credit or lifetime learning credit.
- Getting help identifying deductions and credits you may be eligible to claim. For example, the free online tax-filing service Credit Karma Tax® can alert you if you’re eligible to claim the Earned Income Tax Credit based on income information you provide.
“Cheating on your taxes is never a good idea, no matter your motivations or how likely you think you are to get away with it,” Hardeman says. “There are legal ways to reduce your tax burden. Plus, being honest on your taxes is just the right thing to do.”
Christina Taylor is senior manager of tax operations for Credit Karma Tax®. She has more than a dozen years of experience in tax, accounting and business operations. Christina founded her own accounting consultancy and managed it for more than six years. She co-developed an online DIY tax-preparation product, serving as chief operating officer for seven years. She is the current treasurer of the National Association of Computerized Tax Processors and holds a bachelor’s in business administration/accounting from Baker College and an MBA from Meredith College. You can find her on LinkedIn.