According to CNN.com, don’t be fooled by tax preparers who promise unusually large tax refunds, but never require any receipts or documentation of these purchases because ultimately you are held responsible if the IRS decides to audit you. For your own safety, make sure you have your taxes prepared by someone you trust and who knows what they are doing.
1) Tax Preparers are Now Assigned PTIN’s
To help prevent this from happening, this year all tax preparers who are paid for their work are required to have a Preparer Tax Identification Number, also known as a PTIN. This way customers can verify that they are legitimate. If you notice that they don’t provide this number, this could also be a red flag.
2) You Make Careless Mistakes
The number one mistake many people make, according to CNN.com is putting down the wrong social security number. The second is incorrect calculations. To prevent the first mistake from occurring, have your spouse look over the paper work. It is much easier to catch mistakes when more than one person is looking over the documents. You may also want to hire a professional tax preparer if you have the money for it.
3) You Tell the Wrong Person
Did you know that if you tell the wrong person that you pulled one over on the IRS and they tell the IRS that you can get into big trouble. Plus, the person who told on you will receive 30 percent of the money you owe. So, be careful who you tell and don’t trust just anyone with this type of information.
4) Being Overly Generous
According to Online taxman’s Villamena, if you donate more than $250 worth of merchandise, make sure you have receipts or documentation that show proof. You may also want to take several pictures of the items you donated, so the IRS doesn’t get suspicious. The more carefully you document this, the less likely it is that the IRS will audit you.
You’ll also want to make sure you don’t overestimate how much you donated. If you make $20,000 a year and state that you donated $10,000 worth of items, this will also be a red flag.
5) You Don’t File
If you’re required to file a return and don’t, the IRS may just hunt you down. This is especially true if you have filed in the past and all of a sudden have stopped filing. The IRS wants to know how much you owe and if you’re hiding something.
Even if you’re not sure that you can make your payments, remember this year that the IRS is giving an extension under certain circumstances, so take advantage of it. It’s always better to file even if you can’t come up with the money right away, otherwise, you might just raise suspicion with the IRS.
Also, keep in mind that even if you don’t need to file, you may be due for a return. You wouldn’t want to miss out on this now, would you?