8 Ways You Could Accidentally Be Committing "Fraud"

Not all fraud is intentional. People can commit fraud accidentally, but even unintentional fraud can come with financial penalties — and even jail time in some cases.

From filing taxes to applying for the best credit card, you may accidentally commit fraud. But how do you know what these mistakes are?

Thankfully, you can take steps to avoid accidental fraud, and you can usually correct mistakes if you've already made them. Here's what to watch out for.

Taxes are complicated, and sometimes people make mistakes. Something as simple as forgetting to include a 1099 or W-2 can result in inaccurate income reporting. But if it was an honest mistake, the IRS isn't likely to go after you for tax fraud.

You can correct your mistake by filing an amended tax return. However, there are time limits for filing amended returns, and the IRS will hit you with penalties for each month that you owe. So, the sooner you correct the mistake, the better.

Claiming tax deductions you aren't entitled to and inflating deductible expenses are considered tax fraud when done intentionally. While the IRS might not require you to attach proof of eligibility to your tax return, you'll need to if your return is selected for an audit.

And you're not off the hook once Tax Day has come and gone. The IRS can audit tax returns from three years prior — or even longer in some cases.

Most tax software can guide you and help determine which credits and deductions you qualify for. However, it's important to keep receipts and maintain good records regardless of how you prepare your return.

Purposely using someone else's credit card without their permission is always fraud, but even using a family member's card with their permission can be considered fraud.

For example, a cardholder might authorize someone to make a specific purchase, but the person purchases something else or spends more than the cardholder authorized.

To avoid committing this type of fraud, don't give your credit card to anyone. If you live with roommates or extended family, don't keep cards in a drawer that anyone has access to.

If you want more people to have legal access to your credit cards, consider making them an authorized user.

To get a credit card, you'll generally need to prove you can afford to pay that money back, so some people may be tempted to inflate their income when applying. However, doing so is considered fraud and could come with financial penalties and even jail time.

If you've made a genuine mistake, you can contact the credit card company to report your error. But avoid lying on a credit card application. Even if the credit card company never catches you, you could further damage your financial situation by using a credit card you can't afford.

It's always a good idea to review your credit card statements and check for fraud. However, it's not impossible to accidentally report your own purchase as a fraudulent one. Perhaps you simply forgot, or maybe the transaction is listed by a name other than the merchant's name.

If you realize you've disputed a legitimate transaction, you can contact the credit card company to report your mistake. A one-time mistake like this isn't likely to cause you issues, but repeated offenses could prevent you from being approved for credit in the future.

Some cardholders might contact their credit card company for a refund if they've forgotten to cancel a free trial subscription or can't return an item because of the merchant's refund policy. Bypassing the merchant might seem like an easy way to get your money back, but doing this is considered fraud.

It's a better idea to keep track of free trials and cancel them before you're charged. Also, read merchants' refund policies before you buy. This way, you won't end up paying for things you don't want, and you won't accidentally commit fraud.

If you change insurance companies, it's important to update your information as soon as possible. Not doing so could result in claims being filed with your old insurer. However, if you're no longer covered by that insurer, the claim is illegitimate.

Insurance fraud can also happen when people omit information to obtain a lower premium. If you forgot to include important information or accidentally answered something incorrectly, contact the insurance company to correct the mistake on your application.

Fraud can occur if you collect worker's compensation benefits but continue doing similar work. It's also fraud if you fail to report earned income while receiving unemployment benefits or any income-based government benefits.

The easiest ways to avoid committing accidental fraud while collecting benefits are to report all your income honestly, terminate benefits when you no longer qualify for them, and never work under the table. (Working under that table can pose the risk for tax fraud, too.)

If you made an honest mistake, try not to panic. Most companies and organizations allow you an opportunity to make things right. The important thing is to report and correct the mistake as soon as possible. Waiting too long could work against you and lead to additional penalties.

If your lender, the IRS, or another agency determines you've committed fraud intentionally, you could face higher fines or, in the worst case scenario, criminal prosecution.

Most people are trying to make the right money moves to improve their lives. Don't let an honest mistake derail your hard work.