It can be challenging to find a soul on this country who does not dread the idea of an IRS tax audit. Then you can find those who have endured this ordeal and survived to describe the stroy of pure horror and torture, now although some of these tales have a component of truth to them others may be vaguely exaggerated, however the actual fact remains where an IRS audit is definitely not a condition that you want to find yourself in. The IRS reserves the authorization to audit the earnings and expenditures of individuals or companies at any point. The only good information here is that the IRS are only entitle to grasp up enough time to audit about 1.5% of all tax returns inside the country. Though, it’s best to take certain preventive actions avoiding an IRS audit.
One of the simplest behavior to hold the hassles of an IRS inspection at bay is to ensure that you report each and every of your income regardless of its source. Whether you’re an employee, business owner or an individual contractor it is usually imperative for being careful when submitting your income taxes. The IRS suggestions explicitly point out the kinds of income that need to be mentioned. If you have any ambiguity about your income, get in contact with a Dallas attorney and make sure that you know about your earnings that need to be reported. You might not have only to declare your salary and also other forms of earning such as tips in your tax returns.
In addition, ensure that you have all the relevant documents with you in order to aid the facts presented in your income tax returns.
If need be, you must be in a position to prove everything that has been listed. As an employee, you will have to depend on your employer to organize the W-2 or the 1099 form; this may have details about your income you have earned from the earlier year while you were working for a specific corporation and other such pieces of information. When submitting your taxes, make sure at the number to your W-2 are the same as the entries on your tax returns.
Easy mathematical errors also have the potential of ranking up several trouble, so it is imperative to make sure that your taxes are calculated correctly. Since the IRS employs an automated system, it takes them a few seconds to spot such errors and even though it might have been a real mistake, it will certainly put you on the IRS scanner which is what you do not want. Just be sure you double check each entry on your tax return documents. Sometimes mistakes occur since the erroneous entries have been entered in the wrong line, ensure that you check the entries and the lines where they are on. If ever the mathematical calculation of your income tax returns is sloppy, the IRS have a tendency to believe that you have been equally careless in the other areas of the tax return that may frequently be ground enough for an IRS audit.
A shattering mistake which is usually committed by independent contractors and business owners is declaring their house a home office. According to taxation laws, for your house to qualify as a home office, an element of the property must be dedicated to the only reason of conducting business. In other words, you can’t treat your own dining room as your office and wait for a tax deduction. If you are not careful and simply claim for home office deduction, you may invite the IRS’s attention. Also, you can’t declare more than 20% of your house for the home office. This means that any deductions of expenditures including rent, mortgage repayments, utility bills etc are going to be limited to 20% of the amount.