All Articles Tagged "tax audit"

What to Do If You're Audited

May 30th, 2011 - By TheEditor
Share to Twitter Email This

(LA Times) — It’s almost summer — time to think about bathing suits and vacations. But this summer there’s an increased chance you’ll open the mailbox to find a thick envelope from the U.S. Treasury.  Welcome to audit season 2011.  Blame federal deficits, wealthy tax cheats and petty larceny, all of which have federal tax authorities clucking over what they believe is a yawning “tax gap” between what people owe and what they pay.  Whatever the reason, the federal government is stepping up income tax audits.  The good news — and bad news — is that audits are increasingly being completed by correspondence, said Gary Iskowitz, a Los Angeles certified public accountant who serves on the IRS’ Tax Advocate panel.  “Over 80% of the audits are going to be conducted by correspondence exam,” Iskowitz said. “They’re far less time-consuming, which means the IRS can audit more people. But if you’re not careful, they can become a paper nightmare.”

Read More…

What to Do When Audited

March 14th, 2011 - By TheEditor
Share to Twitter Email This

(Businessweek) — There’s nothing that strikes fear into the heart of a small business owner like getting an audit notice. The chance of being audited in any given year is small: About 1 percent of 2008 taxable returns were audited, according to the latest available IRS statistics. But self-employed individuals and small business owners are more likely to be audited than employed persons, particularly if they report adjusted gross income of more than $100,000.Scott Berger, a CPA and tax principal withKaufman Rossin in Boca Raton, Fla., spoke recently to Smart Answers columnist Karen E. Klein about “hot spots” for IRS audits, what to do during an audit, and how to avoid audits in the first place….

What triggers an audit?  The IRS will tell you it’s random. Their computers are programmed to look closely at differential scores, but how those are defined is closely guarded. There are all sorts of stories as to what generates an audit, but I don’t think there’s something specific.

Do certain things make an audit more likely, such as having an office in the home?  It seems like the home office is not as big a deal as it used to be. On the other hand, if the auditor wants to look at the home office and finds the kids’ toys in there, they might challenge it.

Read More…

10 Ways to Avoid a Tax Audit

January 25th, 2011 - By TheEditor
Share to Twitter Email This

(Wall Street Journal) — Report all of your income. The IRS uses information returns, such as W-2s and 1099s, to cross-check income reporting. Under its document-matching program, the IRS’ computers compare information on the forms with the income reported by taxpayers on their returns. If the information doesn’t match, this leads to an automatic audit. But don’t panic; it’s merely a correspondence asking about the discrepancy. It can be easily cleared up by submitting an explanation by mail if you think you are correct, or paying the tax owed if the omission was your oversight and the IRS is correct.

Read More…

Get the MadameNoire
The best stories sent right to your inbox!
close [x]