What Triggers an IRS Audit correspondence?
IRS audit correspondence is definitely one of the most stressful aspects we have to face in our lives. Many of us would rather face other problems than deal with it. But then, this is something that we do not have any escape route at all. We can elude it but definitely not for long.
Historically, there are only few tax returns that IRS gives a second look. But the following can actually increase your chances of getting an IRS audit and start getting IRS audit correspondence.
Earning more than a million
Upon you reported an income reaching up to 7 digits, you skyrocketing your chance to get audited. IRS is more focus on those rich people. The idea behind this is that they need to take a closer look to those who have the most money as they are those who have more to hide. The budget cuts from a few years back is another reason for they need to net the best possible return on the investment on the audit.
Taking big deductions for the charity
When you give to charities, it would be a great write-off for your tax. But then, when it is disproportionate from compared to the income you got, you can expect an IRS audit coming for you.
Filing a tax return for an estate
This kind of tax return is quite rare and because of this, the IRS takes these forms carefully for scrutiny. Just like with income returns, if you have a bigger estate, the chances of being audited is bigger as well.
Failing to report all your income
The forms you receive from your company like the W-2 forms and 1099s have a duplicate to the IRS as it is the company’s obligation. Once, your report does not match with those forms, you can at the very least expect an audit letter.
Breaking Foreign Account rules
If you have any money in any account outside the country, it is imperative that you include them in your report. Otherwise, you will be granted of severe penalties aside of course from the IRS audit.
Taking an early retirement account payout
Owners of ant retirement accounts that withdraw a great sum of money before reaching the age of 59 ½ are given special attention by the IRS. It is because of the additional 10% penalty that it is subjected to. If the withdrawal made is for a certain and valid reason, this can be overlooked.
Claiming a big business deduction
When you take a business deduction that is disproportionate to your income, IRS audit will be with you in no time. If you reported it for a big loss in your business operation make sure you have all the necessary write-off to back you up.
Facing an audit from the IRS is definitely a problem we need to deal with properly with regards to our taxes. So when you have IRS audit problem, you know where to go for assistance. Green Tree Tax is definitely your ultimate tax problem solver in Houston.