Staying off the IRS Radar Screen
Nothing strikes terror in the heart of the American taxpayer quite like finding a audit letter in the mailbox from the IRS! In an effort to help you avoid that unpleasant scenario, provided below are examples of some common pitfalls to avoid if you don’t want the IRS lining up to be your new pen pal.
It’s surprising how many people mail their returns to the IRS without a signature. Before mailing, be sure to recheck everything and don’t forget to sign your return. An even better solution is to file electronically. Returns filed electronically have safeguards and controls to eliminate common errors. Additionally, the return goes directly to the processing center and the information does not have to be keyed into a computer by an IRS employee, which could result in additional errors.
Did you remember to include all income on the return? If you received a Form 1099 from anyone, be sure this income is on the return in the right place or you will receive a notice. Even if you did not receive a 1099 for work done independently, you are required to report the income. IRS receives copies of 1099s from banks, stock brokerage firms, rental agencies, and subcontractors and these are checked against income reported.
If you made estimated payments or paid your taxes quarterly, check the amounts and the dates the taxes were paid. Forgetting to include a payment is a frequent error that makes your tax burden look heavier. Many people forget to include the January payment, so keep in mind that the first payment of the year is sent in April, followed by June and September payments and concluding with the January payment in the following year.
If you file or pay late, you will receive a notice of delinquency and be charged interest and penalties, so try hard to avoid that. If you can’t pay taxes that are due by April 15, be sure to file the return on time with a Form 9465, Installment Agreement Request, either electronically or paper filed.
Incorrect social security numbers will generate a notice or a disallowance of your dependents. Don’t mail the return without verifying that all social security numbers have been entered correctly. Transposing those numbers is more common than you’d think.
A few minutes of extra time reviewing your return will pay off in peace of mind and help you stay off the IRS radar screen.
The author is an enrolled agent, licensed by the US Department of the Treasury to represent taxpayers before the IRS for audits, collections and appeals. To attain the enrolled agent designation, candidates must demonstrate expertise in taxation, fulfill continuing education credits and adhere to a stringent code of ethics.