IRS Penalties

The IRS audit is something virtually all tax payers worry about and with good reason. An audit requires that all of the information on the tax return be shown to be accurate. An audit can happen to anyone at virtually any time. Most importantly, it is not an accusation that you have done something wrong. Rather, it is an opportunity for you to prove that your return is accurate to the best of your knowledge. The good news is that it does not have to be that bad if you hold on to your receipts and are honest about what you are claiming on your tax return.

Understanding The Audit

An IRS audit can happen to anyone at virtually any point in time. Yet, there are some people that are more likely to be audited than others. If you are one of these, then you should be sure that all of your information is accurate and records are being kept in case you are contacted by the IRS for an audit.

· Cash Business: People that are paid in cash are the most likely targets for the IRS. The reason behind this is quite simply because they are the most likely not to report all of their income. The fact is that the IRS realizes that people in professionals such as bartenders and hairdressers are making tips that aren't being reported. Therefore, if this is you, be sure that this information is correctly being recorded.

· Professionals: Some professionals that run their own businesses are also going to be more likely to be audited. For example, those that are doctors, lawyers or accountants generally run their own business and do their own bookkeeping which makes it rather easy for them to not report all of the income that they bring in. Again, if you are a doctor, lawyer or other business professional like this, do keep records to keep the auditors away.

· Large Deductions: If you take large deductions on your tax return, chances are good that you are going to be one that faces these same problems. Auditors realize that there is likelihood to take more than you are supposed to and that to can help to encourage an audit to be done on you.

For those that are considering whether or not they are likely going to face an IRS audit, the best tools for you are the simplest. Be honest in what you are reporting. Be sure that you keep your records organized and be ready to show to the IRS that you have nothing to hide.

IRS Penalties |