In this article we're going to cover another type of fraud that is very common, especially in the United States. This is benefit fraud.

Benefit fraud comes in all shapes and sizes. The bottom line is the person who commits benefit fraud is receiving money from the government that they are not entitled to. The number of ways to commit benefit fraud is exceeded only by the amount of money that it costs the government each year.

One way to commit benefit fraud is by not reporting some of your income on your income tax such as if you have a savings account with substantial earnings. This lowers the tax burden of the individual thus lowering the amount of money they either have to pay the government or raising the amount of the refund that they receive.

Another way to commit benefit fraud is by misreporting the number of dependent children you have in your home currently living with you. A family with 3 children that only is responsible for 2 of those children is legally not allowed to claim the third child, especially if the child is either over age or living in their own apartment or home. These children are responsible for filing their own taxes. But benefit fraud is not only limited to income taxes. Another area benefit fraud hits is with actual benefits such as welfare and social security. In the cases of people who are eligible for welfare or social security these benefits are contingent on how much money they have either made, are making or will make. In many cases these people will either not report their income, which is easy to do if they are retired and working a part time job, or they will only report a portion of their income, under the amount that would lessen their benefits. For example, if the maximum income a person can earn and not have their social security affected is $6,000 and they are earning $9,000 they won't report the additional $3,000 of income. This translates to benefit fraud.

It is estimated by the United States government statistics that 1.5 billion dollars are lost each year because of benefit fraud. This money could have easily been spent on other government services. This is one of the main reasons that benefit programs such as social security and Medicare are deep in debt and in danger of closing down.

The government does what it can to stop benefit fraud. Computer systems compare information to determine whether or not customers are entitled to benefits. For example, if someone was paying National Insurance contributions on earned income and at the same time their benefit claim showed that they didn't have any earnings then that is an indicator that something is wrong. This is how they crack down on violators.

Benefit fraud is a growing problem not only in the United States but in many other parts of the world. Until measures can be put into place that can guarantee that benefit fraud can no longer happen, the problem is going to eventually drain each economy until it reaches the point where these programs and the economy itself will have a difficult time staying on its feet.