Making a lot of money can decrease stress in your life. But, it could also increase the likelihood of suffering through an IRS audit. In fact, the IRS audited 16.22% of those that earned more than $10 million in 2014. No matter how much money you make, there are certainly a few things that you can do in order to stay on the straight and narrow with the IRS. Think about following these simple steps to help you file a clean tax return each and every year.
It is always recommended that you be 100% honest when you are filing your tax return. Tax law requires you to report all of the income that you have made to the government each year.
There are some people that believe they can lie to the government and get away with it. What you have to understand is that the IRS will use three different computer systems and they are all very detailed and complicated. They are definitely able to determine if you have reported accurate information on your return.
Think about using a tax program or a professional to help you with your taxes. Doing either one of these would help decrease the likelihood of any mistakes. Many individuals will have math miscalculations on their returns. When you work with a professional, or you use a specific professional, these miscalculations can be decreased.
Do you plan to file a schedule C? Believe it or not, those that file a schedule C are often more likely to be audited than those that do not file this form. You may be asking yourself why this is. It is actually because tax law will give you the opportunity to take deductions with a schedule C and there are a lot of people that will abuse these deductions. So, if you are planning on filing one of these, you should think about working with an account to ensure that you do everything correctly.
You should be concerned with deductions related to a home office just like you would be with a schedule C. When it comes to these types of deductions you are going to find that it is always best to have a business phone and to also make sure that you are keeping an appointment book related to those clients and customers that you worked with. While you may never be asked to supply this information to the IRS, it is always good to have it on hand if they ask for it.
Your Tax Refund Might Be Delayed
You will also be more likely to be audited if you are married and you decide to file separately. Therefore, think about filing your tax return together to decrease the chances of being audited. Work with a professional to determine if filing together would be better for you than filing separately. They will be able to help you identify which return is the best.
If you do end up getting audited, contact a tax attorney to represent you. That is the safest way to insure a positive outcome and avoid any unnecessary penalties from the IRS.