Last Minute Tax Tips and Red Flags to Avoid Potential Audits
TaxAudit.com's reminders for April 15th filers
CITRUS HEIGHTS, Calif., April 1, 2015 /PRNewswire/ -- TaxAudit.com, the IRS audit experts that defend more than 24,000 Americans under audit each year, today released a list of tips for last minute filers.
Said Dave Du Val, VP of Customer Advocacy at TaxAudit.com, "The tax code is a massively complex set of rules and it's hard for American taxpayers to get it all right. As we get closer to April 15th, the tendency to rush to completion can lead to unnecessary errors and we don't like to see anyone owing more or leaving money on the table. This list covers the most common mistakes we've seen from our 5 million members over the past 25 years."
Dave's tips include:
1. Report all of your income.
Report the amounts from all of the tax statements you receive such as 1099s, 1098s, W-2s, etc. The IRS is expecting to see these amounts match up to the amounts reported to them by third parties. A mismatch in what they see and what you report will likely result in a computer generated notice.
2. Proofread every item on your tax return.
Data entry errors are one of the most common causes of audits and notices. An unusually large tax refund might actually be an extra digit in the amount you entered for your W-2 withholding. And, similarly, a large amount owed could also be caused by one digit!
3. Compare last year's return with this year's return.
If your situation was similar to 2014 but the bottom line of your tax return is drastically different, take a few minutes to go through last year's return, comparing it line by line to this year's. This will help you identify any errors.
4. Ask yourself: Is it really a business according to the Internal Revenue Code?
If you have a business with little or no income for which you have been reporting a loss year after year, review the IRS's guidelines for determining if an activity is a business or a hobby. Maybe it's time to stop reporting that hobby as a business.
5. If you are separated or divorced and share custody of your children, communicate with your ex-spouse about who is legally entitled to claim the kids this year.
Whenever possible, it's best to avoid putting the IRS in the middle of your dispute with your ex-spouse. If you do, they will use the tie-breaker rules to determine which parent is eligible to claim the child and not what is "fair."
6. Verify e-filing.
Follow up on your e-filing and make sure your tax return was accepted by the IRS and state. It's no fun to find out a year or two later that your return was never received and that you owe failure-to-file penalties.
7. Facts versus guesses.
You may be in a hurry to receive your refund, but take the time to check your records to list the exact amounts used for income, expenses and deductions as opposed to using a "ballpark guess." The IRS might feel your numbers are estimations or "guesses" if all the numbers end in three zeros.
8. Fact versus fiction.
Just because your neighbor, coworker or even the butcher tells you they deduct "everything," don't believe it! Do your research, look it up and remember, most tax software programs have links or additional information to explain the requirements to deduct certain items. The IRS does not look favorably upon a taxpayer who uses the excuse, "But my butcher said I could!"
9. Consider paying yourself first.
There are very few things you can do to lower your taxes after the year ended on December 31, 2014, but contributing to your IRA or self-employed plan is at the top of the list. Just make sure you are eligible (and able) to contribute to a qualified IRA or self-employed plan.
Please note: This is only a short list of what taxpayers need to know for filing their 2014 tax returns. Remember to spend time with your tax preparer and learn the rules at IRS.gov so you and your advisor are knowledgeable about qualifying expenses, eligible purchases, contributions, gifts, etc., so you can reduce your tax burden and file your taxes correctly.
For more information, please visit www.taxaudit.com.
About TaxAudit.com
TaxAudit.com is the largest and fastest-growing audit defense service in the country for taxpaying individuals, small businesses and tax preparers, with nearly 5 million members and 24,000 audits handled and resolved each year.
TaxAudit.com offers prepaid IRS audit representation and defends taxpayers from the moment they receive an audit notice through to the best possible resolution. TaxAudit.com members receive expert tax representation, relieving taxpayers from the nightmare of being audited, at a price point any taxpayer can afford.
TaxAudit.com is headquartered in Citrus Heights, CA.
SOURCE TaxAudit.com
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