The deadline for getting those taxes in is quickly approaching, with April 15th right around the corner. For those in Minnesota who have yet to file, this is the time many are doing a mad dash trying to get all their paperwork in order. However, while the deadline is approaching, don’t let the stress of wanting to get everything in deter you from making the right decisions when it comes to filing your taxes.
While even the most well-intentioned can end up being audited by the IRS, there are certain mistakes that can be considered red flags. A recent Forbes article focused on some of these mistakes.
For example, failing to report any kind of income is a rather common mistake. In some of these cases, it is not that the filer purposely was trying to hide income. Rather, the filer was confused on what is or is not considered income. To avoid this, keep in mind that – to the IRS – everything is income. If there is any question, whatsoever, about whether something is income or not, make sure to bring this up with a tax preparer.
Along these same lines, realize that if a 1099 form was sent out, the information on this form should be included when filing. From the standpoint of the IRS, a lot of what they do is match information from forms. This means that if a 1099 was sent out, but is not included in a filer’s taxes, this is a red flag. And while it could be a simple mistake on the part of the filer – overlooking one form – the IRS is not known for being super understanding when it comes to tax issues.
Lastly, in terms of missing information, when preparing a return, make sure all foreign income and assets are included. Even if the amount in one of these accounts is less than $10,000, it should still be reported anyway, as it may have taxable interest.
In the end though, realize that even the most careful can still end up receiving a federal tax notice and that you are not alone. When this happens, reach out to a licensed tax preparation professional or certified public accountant right away. After the circumstances have been reviewed, this may also be the time to contact a tax attorney.
Source: Forbes, “Top 10 Tax Mistakes To Avoid At All Costs,” Robert W. Wood, April 1, 2014