Most people don’t want to mess around with the Internal Revenue Service and try to be honest and report everything to the letter. Sometimes, however, mistakes are made. If a person finds out that his or her past taxes are under scrutiny with the IRS, this may trigger an extreme panic attack. Because the U.S. government is having such trouble paying their own debts, they’ve decided to ramp up tax collection to generate income. Members of Congress have allocated more dollars to their taxation enforcer division. This means more audits and questions from Uncle Sam. Here are some steps to take to stay on the right side of the street when it comes to paying your taxes:
- Forgetting to sign your return: When the IRS receives a form that isn’t signed, they will send it back. If a person does this on a regular basis to buy time, the enforcers will see the pattern and nab you. It can even be considered fraud which is a criminal offense and result in your need for a tax attorney.
- Be specific: If you donated $1,293. 76 to charity, list it in exactly this way. If you spent $3,798.99 in repairs on your rental property, better write that down on your return. Individuals who round up to $1,300 and $3,800 will send up red flares to the nitpickers saying they are sloppy and don’t really have the receipts or keep tight records. This is a recipe for an audit. Be specific and keep receipts to back it up, just in case.
- Keep up with your bank accounts: During an audit, Uncle Sam’s investigators will look through every nook and cranny of your bank accounts. Transferring money around to hide sums you’d rather not discuss will not be looked upon favorably.
- Income statements that don’t match: Income from all sources must be reported and this includes W-2′s, 1099′s and statements from your investment portfolio. Don’t forget to add them all in or you may be facing an audit as well as dialing your CPA for a consultation.
- Self-employed workers must be especially vigilant: When workers toil away for themselves, they will need to keep scrupulous records. The Internal Revenue Service takes a closer look at the self-employed because there are more opportunities to play around with the figures.