26 Jan How to Avoid Risks of Being Audited by the IRS?
If you do not file your taxes correctly each year, you are risking being audited by the IRS. Being audited is something that most people dread. Whether you own a business and have merchant accounts or do credit card processing or you are simply an individual who is at risk for being audited, there are certain things you should know in order to avoid and prevent this fate.
One way to avoid being audited by the IRS is to do your taxes very well or have an expert do them for you. One of the main reasons people often get audited is because they avoided filing something on their taxes or they claimed too many exemptions when they were not entitled to receive them. If you have your taxes done by a professional, don’t hesitate to look them over carefully or have another expert look them over before sending them in. Even the professional tax preparers can make big mistakes on your forms and this can cause you to be audited by the IRS.
Another thing that many business owners have problems with is the fact that they do not claim certain things on their taxes. For instance, merchant accounts and credit card processing fees should be claimed and you want to let the experts know this if you are getting your taxes professionally prepared for you. In general, it is better for you to claim more things on your taxes than not enough because this can help to prevent you being audited by the government.
Many business owners also have problems in terms of how to claim their business. While you can claim your business as a hobby, you will find that you owe less in taxes than if you simply claim your business as being self-employed. If you claim the business you own as merely a hobby, you are putting great risk on yourself in terms of having to answer to this by the IRS. This is why it might be a good idea to look over your taxes multiple times before actually sending them in.
Being audited by the IRS is very scary and can cause you to owe thousands of dollars in back-taxes that you did not pay. The best way for you to avoid this problem is to simply take your time with preparing your taxes and consider having a professional do them entirely for you.