How to Avoid an Income Tax Audit

IRS auditWith the rate of income tax fraud steadily rising, the IRS has been aggressively trying to plug the leak to one of the federal government’s largest sources of revenue. Individual income-tax accounts for more than 40 percent of the government’s federal tax revenue. So, it shouldn’t surprise anyone if the IRS decides to probe your tax return and investigate every penny you make. But not to worry, follow these quick tips and you’ll greatly reduce the chances of Uncle Sam knocking at your door with a calculator and magnifying glass.

-       Report ALL your income! We’ve all heard of celebrities who end up doing time in federal prison because they tried to hide their income and not give the government their cut. This is an extremely bad idea, and not worth the risk involved with owing the IRS money. NEVER do this and you won’t have to worry about having a cellmate named Bubba.

 

-       Don’t claim ridiculous deductions! Your cat’s Christmas sweater is probably not going to fly as a business expense. The IRS will compare the deductions you claim to other people in your income bracket to determine whether you’re being reasonable or trying to get over on them. So don’t claim Fluffy’s clothing on your return.

 

-       Choose a professional and reputable tax/accounting firm to file your taxes with! If the IRS suspects that a tax preparer routinely fudges numbers, you could end up being one of the unlucky ones if they decide to audit all the clients of that tax office.

 

Millions of Americans look forward to tax season for a much-needed boost to their finances. Your tax refund could give you the means to put a down payment on a new car, take much-needed vacation or pay down some debt. But if you still get audited, don’t fret. The Fortham Group tax preparers and accountants can help you sort out your issues. 

3 Tips for Filing Your Taxes After April 15th

April 15 is the annual deadline for most people to file their federal income tax return and pay any taxes they owe. By law, the IRS may assess penalties to taxpayers for both failing to file a tax return and for failing to pay taxes they owe by the deadline.

Here are three things to consider if you’ve missed the deadline:

  1. Identity Theft – Be cautious when choosing a tax preparer to file your taxes. The amount of tax-refund related fraud has skyrocketed in recent years because of unscrupulous tax return agencies without proper certification. The IRS has become increasingly stringent as a result of this epidemic. Be especially aware of the ones that don’t ask for proper documentation when preparing your refund; driver license, children’s birth certificates etc.
  2. Gather All Documents – Keep all your receipts properly filed away throughout the year. However, if you haven’t, organize all your documentation; receipts for deductions, W2’s, 1099’s etc. The more complete and organized your documents are, the easier it is for your Tax Accountant to maximize your return and ensure its accuracy.
  3. Contact a Qualified Tax Accountant – After you’ve gathered all your receipts and wage documents, seek out a certified tax specialist who is qualified to prepare your tax return and give you proper guidance on what you need to do if you’ve missed the deadline to file your taxes. This is the most critical step in filing your tax return. If you take nothing else away from this article, remember this: CHOOSE THE RIGHT TAX SPECIALIST!

Keep these important considerations in mind if you’ve waited a little longer than you should have to file your income tax. Choosing the wrong tax preparer could mean the difference between protracted grief, and smooth sailing.