It’s the middle of the craziest season of the year, but it’s not winter — it’s tax season! Every year that you file you should do so with the goal of not being audited by the IRS. To avoid being audited this year, and every year after, know the red flags that you should bypass.
Report All Income
For each job you work for you will be sent the required tax forms; the W-2 and the 1099 forms. When you file your taxes you must fill out these forms as accurate as possible. If you fail to report all of your income, the IRS will know based on their records from your employer.
Report Your Small Business
A lot of small businesses fail to see any profit within their first few years. Whether you make a profit or not be sure to report everything when filing. Report your revenue, expenses, losses, and even save all of your receipts. Being able to prove that you’re struggling, but still trying, will keep you in the IRS’s good graces.
Report Overseas Money
It’s possible for a U.S. citizen to have an investment or bank account overseas. No matter if you’ve had the account for a day or a decade, these earnings should be reported to the IRS. The Foreign Account Tax Compliance Act that has been recently put into place has demanded that all financial institutions report to the IRS. Failure on your part to report this money will result in payment of all back taxes and other serious penalties.
Avoiding a tax audit can be fairly easy as long as you are honest throughout the entire filing process. If you’re unsure on how to correctly file your taxes, rely on the professionals at Berkow, Schechter & Company LLP. To learn more, or to schedule an appointment, give us a call at (203) 356-1061.