AMA Houston Home

AMA Houston Home

How to Avoid Getting Audited by the IRS

IRS audit can be quite a scary term for anyone. When the IRS comes for an audit, they are going to go in the deepest details of your tax returns and the accuracy of your records. While an audit does not always mean you are in trouble, it does mean you are close to being in it, so it is best to avoid it in the first place. Here is how to avoid getting audited.

Importance of Accurate Tax Reporting

The first thing you want to ensure to avoid an audit from the IRS is to make sure your tax ID and tax reporting are accurate. Many IRS audits result from mistakes in basic mathematics and arithmetic calculations. You also want to avoid rounding off the numbers too often. Too many perfectly rounded off figures can raise eyebrows.

List All Assets

Whether you are an individual or someone filing business taxes, you have to keep a good record of all your assets. You have to record all the assets of your business i.e. the ones you are buying and those that you are selling. Keep in mind that the assets you purchase for business are tax deductible. However, selling the same assets results in capital gain or loss too.

Avoid Incomplete Information

There is a lot of information that you have to fill in the forms other than your deductions, incomes, etc. Oftentimes, people end up filing their tax returns with incomplete information because they file their returns very close to the deadline. Completion of information is a serious matter, so serious that IRS even released a warning for the e-filers once to avoid uploading their information before receiving all the forms from taxpayers. Always check registered name, registered address, IRS tax ID, signature, RDO code and other important pieces of information before returning your taxes.

Dependents

When you are stating dependents on your returns, make sure they do qualify as dependents. You can even use online tools to know whether a dependent needs to file their own tax returns or not. There are certain income requirements that dependents have to meet to file their own returns. Do not jumble up the information and provide accurate details about dependents if they are not filing their own tax returns.

Filing Dates and Deadlines

Always know the right dates and deadlines while filing your returns. Do not file late or too early—filing too early gives IRS more time for detailed scrutiny. Make sure you follow the deadlines if you have been approved for an extension. Despite the extension, you will have to pay all your taxes on the due tax return date i.e. April 15. All you get is some extra time to arrange the paperwork.

If you are about to start a business, obtain an IRS Tax ID number as soon as possible and take help from a professional accountant right from day one to avoid tax return issues. Read More


How Affordable Are IRS Payment Plans?

When it comes to paying your taxes, you have more options than you might realize. Many people are under the impression that they have to file their returns on the due date and pay their taxes in full no matter what, but that’s not true. When paying your taxes is difficult, you have IRS payments plans to make things affordable. Here is some information about the various payment plans you can use to make taxpaying easier for yourself.

IRS Payment Plan Rates

When you can’t pay your taxes in the form of a lump sum payment, you can take advantage of IRS payment plans. If you are wondering how to get IRS payment plan, just know that you can apply for this option using specific IRS forms, online or just using the phone. If you owe IRS less than $10,000, IRS will put you on guaranteed installment agreement wherein you are given three years to pay off the balance without any set minimum payment. If you owe more than $10,000, a minimum monthly payment has to be paid and you still have 72 months to pay back in full. For balance of more than $25,000, IRS can ask for additional financial details from you.

Save Money Using Payment Extensions

You also have the Online Payment Agreement application option to pay your owed taxes with additional 120 days given to you. The good thing about particular option is that your interest and penalties are much lower compared to if you choose to pay the same balance using an installment option of 72 months. You don’t even have to pay any additional fee for this extension of 120 days. You can even have late payment penalties waived off if you use the Application for Extension of Time for Payment Tax Due to Undue Hardship.

Low Income Programs

If you are an individual with low income – below a certain level – then you can save some money when applying for a payment plan. For example, if you are going for a long-term payment plan, i.e., more than 120 days, you will have to pay a setup fee of at least $107 while applying through the mail, in person or phone. However, the same setup fee reduces to $43 only if you qualify as a low-income taxpayer.

Now you know that you don’t always have to pay your taxes in full. To take advantage of the affordable IRS payment plans, get your IRS tax ID online today. Read More