When the IRS decided in 1986 to start requiring taxpayers to provide the Social Security numbers of the dependents they claimed on their tax returns, 7 million children seemingly vanished into thin air.

 

Apparently many taxpayers were listing their pets and imaginary children on their tax returns. A midlevel IRS employee who had a fascination with the types of creatures and objects claimed as dependents had suggested the change on the 1040. The story was recently told by Freakonomics and Super Freakonomics co-author Steven Levitt at a keynote address of the American Bar Foundation, according to a story in the ABA Journal linked to on the taxprof blog Levitt said he told the story to his father "and he admitted that I had lost a brother and a sister that fateful night."

 

The IRS has been busy in the past quarter-century uncovering other ruses that taxpayers have been using to lower their tax bills. Even today, social security numbers can be bought on the "street". Many are willing to sell their children's social security numbers (either because they do not file or do not need the additional deduction). The going rate for social security numbers in the United States is $500-$800. As some taxpayers no doubt will be learning after this tax season, Fido, the dog, or that invisible son or daughter is just not going to pass muster if their returns ever get audited.

 

There is no need to claim these bogus dependents, with the complicated and convoluted tax code, Congress (who writes tax code) has created hundreds of "better" ways to save on your taxes.

 

This tax season have an experienced tax strategist prepare your taxes, someone that knows the "loopholes" in the tax code and you will be pleasantly surprised at how well you can minimize your taxes. Plus, you will not have to worry about Fido being disallowed by the IRS and you facing serious consequences for fraud.
     

Wishing You Many Happy Returns,