Do Americans Cheat on their Taxes?

The image of the cheating businessman or the dishonest accountant is regularly seen in popular culture. Believe it or not, however, studies indicate that most Americans are actually quite honest when it comes to paying their income taxes. An, surprisingly, the rate of cheating is quite low, especially compared to other countries.

Some might argue that Americans don’t cheat only out of a fear of consequences or of being found out via an audit. However, audit rates are much lower than in recent years. Plus, the likelihood of serious consequences, like jail time, is low for the average taxpayer even if caught.  

So, perhaps it’s something more than fear that spurs Americans to honesty. Perhaps it’s a sense of obligation. A recent survey by the IRS itself actually found that 88% of Americans felt it was unethical and not at all acceptable to cheat on taxes. Even outside of IRS surveys, America has a voluntary compliance rate of income tax filing that ranges from around 81 to 84% on average, which is pretty impressive!

America’s voluntary compliance rates actually prove higher than those of Germany, Italy, and many other countries. So, there really must be something to the whole “American integrity” idea.

On a personal level, no matter how you feel about taxes and their ethical implications, bear in mind that it’s always in your best interest to stay on the side of the law. Not paying taxes or cheating on taxes could cause you to end up owing more and to face some severe fines and penalties. So, put aside any personal feelings or opinions about taxation you may have, and just do the right thing. It appears that most of America will be doing the same.

Easy Ways to Save on Your Taxes

Paying taxes is not something that anyone looks forward to. In fact, for many, they can prove to be a big financial burden. However, if you know what you’re doing and you play your cards right, there are many ways that you can end up saving money on your taxes.  

Tax Credits

Tax credits are wonderful because they reduce how much you owe in taxes. And, if you take enough of them, you can often end up with a nice refund come tax time.

There are all kinds of tax credits available such as credits for buying energy efficiency products for your home. Check with a tax professional for a full list and then take whatever credits you possibly can.

Deductions

Deductions are similar to tax credits in that they can save you money. They can “cut you a break” on taxes that you may owe.

And, as is the case with credits, there are a lot of them. You can earn deductions for everything from charitable contributions you make to having a home office. Talking with a financial professional about your situation is the best way to learn about deductions available to you and to take full advantage of this opportunity to save.

As you can see, there are plenty of legal ways to save money on taxes. And, with so many legal options to save, it would not be wise to resort to anything illegal or unethical. Not only can an illegal course of action be dangerous, but it can also get you in serious trouble with the law. So, always save in legal ways with the help of a professional; after all, there are plenty of ways “on the up and up” to save.

Where Do Your Tax Dollars Go?

When you pay taxes, they go to pay for a lot of state and federal ventures. And, unfortunately, you don’t really get too much of a say in how those tax dollars are spent. In many cases, you’ll never even know.

Of course, that’s not true for all departments. Some are actually quite open about what they’re doing with your dollars. Case in point: The United States Department of Defense, which posts all of its major contracts on its website.

Just last month, the Department of Defense received over $31 billion, and we think you’d be interested to hear about some of the things it did with your hard-earned money.  

Air Force Testing Projects

Around $15 million went to two defense contractors: Leidos Holdings and Ball Corp. Their plans, collectively, are to spend money doing complex testing involving lasers and other high-tech tools to create better defenses and weapons for our air force.

An Aircraft Carrier

Another defense contractor, Huntington Ingalls, received over $4 billion to create a new nuclear aircraft carrier. That carrier will be called the USS John F. Kennedy and is expected to be completed within the next decade. And, if you think that’s expensive, one like it has already been designed, and two more are expected to follow.

Replenishment Pharmaceuticals

The largest amount of money the Department of Defense has given as of late is a whopping $6.1 billion, awarded to McKesson. This company is going to be providing replenishment pharmaceuticals to the Tricare Pharmacy, which provides medications to people in the service, people who are retired from it, and their dependents.

So, as you can see, your tax dollars are put to use. Whether you think it’s good use or not doesn’t really matter. The fact remains that you have to pay taxes. To make sure that you still have money left over to spend on things you believe in, hire the right accountant!