Internal Revenue Service Audit

Choose your favorite scary movie. It could be the first Alien or something. No matter how scary they were, there's nothing scarier than an audit by the Internal Revenue Service.

If a person has a nightmare for the finances, it is likely that this is the Internal Revenue Service audits. However, if you pay taxes regularly and are honest about your filings there is no reason why you should be afraid of an audit. The Internal Revenue Service collects the people with the help of a software program that zeros in on people who have made a mistake in the submission of returns.

Normally, people who show deductions are too high in relation to their income tax or erroneous as they are more likely to face a tax audit. Even so, only 1.5 to 2 percent of all tax filers are audited every year. The reason for the relatively low rate is the Internal Revenue Service simply does not have the staff to do the job. Think about it. There are hundreds of millions of tax returns filed each year!

One area where the Internal Revenue Service does not get riled about is unfair business bears the loss. The Internal Revenue Service is looking for people that show loss of activity over the years. If you are claiming business losses each year, the question arises of how staying in business. People who fudge in this area are really asking for trouble.

Also, if you have these things on you tax forms you may attract a tax audit:

1. Unreported taxable income is sure to attract audit. For example, interest earned.

2. She has complicated business expenses

3. You have rental expenses.

4. Have you been checked previously and proved his guilt.

5, If you are a partner or shareholder in a company audit.

6. She says to donate heavily to charity.

7. Self-employed workers have the greatest ability to take incorrect deductions, consequently, are more likely to be controlled.

8. Deduction of home office which are open to the examination more often.

9. If the mileage required is large enough to cause doubt.

10. If you have not presented the food under the income tax.

11. Some informant tipped off the Internal Revenue Service about you, ie, an ex-spouse.

The good news is more Internal Revenue Service audit fall under the category of correspondence audits. In fact, I was tested last year. The Internal Revenue Service sent me a letter stating that he had not declared dividends of $ 60 from a stock of debt and a small amount of taxes. I checked and discovered something interesting. I think I owned a store and did not know. It turned out that I had received shares in a merger, but had moved and not received them. I paid the fee and it was done with it. By the way, I have a really bad stock performance.

To avoid Internal Revenue Service audit, you must be able to prove your claims. If you are claiming something that is out of the ordinary, make sure you have receipts, documents and so on to support it. A good accountant helps as well ....