Avoiding An Audit
Even if you aren't making millions, or even hundreds of thousands, the thought of getting audited by the IRS is a strong reality. Did you know that the amount of audits performed by the IRS increased by around 35% in 2011? Even though the odds of getting audited are in your favor with less than 1% of Americans having to have their tax returns scrutinized, you still want to make sure that you do not do anything or make filing mistakes that may result in you setting off red flags with the IRS. Read about what to do if you are audited.

Below are a few of the less-evident situations for steering clear of the IRS.

Always Utilize a Calculator
Experts indicate that the number one reason individuals set red-flags off is a result of them filing returns with math errors present. Even though these are likely naive, careless mistakes, these mistakes can equate to a full-scale audit. Don't get audited unnecessarily! At the very least, utilize a calculator for all adding and subtracting. A calculator is never wrong. However, even if you are a professor in Mathematics, humans make mistakes! And when you are done with your returns, prior to sending them in, double check everything! The IRS is not going to choose returns to audit at random. If the IRS believes that you owe more taxes, they will audit you...and have up to three years from the filing year to decide to do so.

Clarify All Abnormal Deductions
If you file returns that encompass deductions that are out of the normal range for items like charitable donations, entertainment, etc. you are likely going to sound alarms with the IRS. The IRS will assume that you are looking to write off more than you are entitled to. In a situation like this, include a note with your return detailing the scenario. For example, suppose you moved offices during the year and your return exhibits a large donation of office equipments, explain that you moved and instead of lugging your old office with you, you decided to upgrade with the purchase of all new office furniture and equipment while donating the old. Writing some sort of explanation is always going to be better than writing nothing and letting the IRS come to their own conclusions. Cover your tracks even more by saving all charitable receipts you receive as well as store receipts for your new purchases.

Claim a Smaller Income
Did you know that someone filing a return with a gross adjusted income of more than $1 million is 9x more likely to get audited than an average middle-classer. Detailing further, the IRS performed audits on 9.1% of those earning more than $1 million gross adjusted income and only 1.05% of those earning less. So, if you can defer income into the next tax year legally, DO IT! However, it is very important that you communicate closely with an accountant if this situation pertains to you. But you probably already do since tax returns with incomes of this amount or more are very tricky and can not be handled by your normal Joe.

Don't Brag On Any Social Media Sites
The IRS has the ability to review DMV and employment records for determining if you have relocated to another state or received any type of promotion. And with the advancement of the Internet and Social Media, the IRS has even utilized popular sites like Twitter and Facebook for uncovering scams and locating cheats. So, if you participate in any type of social media site, be careful what you say and/or pictures that you post. You don't want to expose yourself as being one that is living larger than you should be and as a result have the IRS thinking you earn more than you actually do.

If You Are Self-Employed You Need to Be Super Cautious
The IRS has indicated that the largest area of the tax gap (amount owed vs. amount paid) occurs in 'Schedule C'. These are the forms for those that are self-employed. In fact, it has been reported that self-employed individuals that generate incomes of $100,000 - $200,000 annually were audited 5x more frequently than those that are employed for someone else (not their own boss). The basis being is that when you are self-employed, you have a greater ability of writing off unproved deductions. The IRS is aware of the amount of interest you paid on your car loan and mortgage and the sum paid for the year to your employees, however those that are self-employed do their books primarily on the deduction side and therefore can easily falsify records.

Tax Settlement Loans - Get rid of your tax debt instantly.
Paying Taxes on Tips - Remember to take some money out for taxes.
Advice for Paying Income Taxes - Everyone has to pay them.
Deductions to Avoid - Don't even try them. If you do, you are likely going to end up getting in trouble with the IRS.
 


 

 


 

Home - Apply Now - How It Works - Approval Requirements - Testimonials
 Contact - Rates & Fees - Credit Help Info - Site Navigate

Types of Personal Financing Opportunities Offered:
Unsecured Personal Loans - Bad Credit Personal Loans
Consolidating Debt with Personal Loans

To Read our Privacy Policy, click here
Copyright 2012 - ChoicePersonalLoans.com