Are you ready for an IRS audit?
Do you save every receipt from every transaction and document it for proof of a justifiable deduction? Are you the person who keeps a shoebox full of receipts in case the IRS audits you?
Now is the time to buy yourself a new pair of shoes and hang onto the box, because you are going to need it. Audits are coming.
The IRS Plans to Hire 87,000 New Agents
The federal government just gave the green light to the IRS to hire 87,000 new agents. Their main purpose is to conduct audits and collect unpaid and unreported taxes.
Audits May Increase
Our experts at Tax Time sat down to crunch some numbers. We determined with this many new agents, every American household could face an audit within 10 years. It is no longer a question of if you get audited but when.
Who Are They Most Likely to Audit?
A lot of people assume that the IRS will go after large corporations and wealthy individuals for unreported taxable income, but according to the Internal Revenue Service, the group responsible for the largest portion of the tax gap is individuals and small business owners. Although no one can predict exactly who will be audited when, the data points to this group as being a fairly easy target.
Understanding the Tax Code
Knowing and understanding the tax code is important to ensure you take deductions correctly and pay your fair share. For example, when it comes to deductions, having receipts and being able to justify them is generally good. But did you know that simply having a receipt with donations may not be enough? For certain donations, some specific words and phrases must be included in the documentation and without it, an IRS agent can disallow the deduction and make you pay. And once they start finding mistakes, an agent can keep digging to find more and start tacking on penalties and late fees.
An Audit Can Be Very Overwhelming
In addition, tracking down and locating everything an agent asks for can be time-consuming and result in countless hours away from work, family, and leisure activities. The bottom line is even if the IRS doesn’t find missing tax payments, the time spent doing an audit alone can also be devastating.
Tax Time CPAs Are Here for You
The good news is that you don’t have to do an audit alone. The best time to start preparing for an audit is right now. Take the time to prepare now, and you will alleviate future stress and headache. Having the peace of mind your paperwork is correct makes facing an audit easier. The best way is to work with a CPA firm that offers audit assistance. Then, build a relationship so you know they have your back when an audit occurs.
Schedule a free call today and let Tax Time CPAs assist with all your tax planning needs.