Press Release (ePRNews.com) - SCOTTSDALE, Ariz. - Sep 08, 2017 - Tax Preparation Scottsdale Phoenix Tax Planning LLC
There aren’t many, if any, people or businesses that enjoy seeing an IRS auditor show up at his or her door, or more likely, a certified letter in the mail. It is physically impossible for the IRS can’t audit every taxpayer’s tax return, so it must rely on specific guidelines to select the returns most on which to focus their attention.
We have highlighted six flags that may make your tax return a target for an IRS audit. Per the IRS, they audit less than 1% of all individual taxpayer returns. For those with incomes between $500,000 and $1 million the percent of audits rises to nearly 4%. That number increases to 8% for those making between $1 million and $5 million.
A guideline called the Discriminant Information Function that is based on the deduction, credit, and exemption norms for taxpayers in each of the income brackets is used to select which returns to audit. The IRS will not disclose the formula for identifying exactly what triggers an audit, but it helps your chances of avoiding and audit if your return is within the range of other returns with similar income levels.
As you might expect, taxpayers who report business losses on a regular basis increase their risk of an audit. For the IRS not to consider your business as a hobby, it will need to have earned a profit in three of the last five years. If you have questions concerning tax preparation Scottsdale Phoenix Tax Planning LLC (http://www.phxtaxplan.com/) are experts.
Income information is received from employers and financial institutions. Taxpayers who overlook reported income are easily identified and may provoke greater scrutiny.
Divorces can cause a lot of negative issues, including tax issues. For example, when divorced spouses prepare individual tax returns, the IRS may compare each submission to identify circumstances when alimony payments may be deducted on one return, but alimony income goes unreported on the other party’s return. Another common trigger for an audit is when both former spouses claim the same dependents.
When it’s time to seek expert tax preparation Scottsdale Phoenix Tax Planning LLC is an excellent choice.
https://youtu.be/9OCCT-WcgRs Source :
Phoenix Tax Planning LLC