audit http://www.wisebread.com/taxonomy/term/2691/all en-US How to Organize Your Paperwork in Just 10 Minutes a Week http://www.wisebread.com/how-to-organize-your-paperwork-in-just-10-minutes-a-week <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-organize-your-paperwork-in-just-10-minutes-a-week" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_writing_paperwork_000077386871.jpg" alt="Woman organizing her financial paperwork in 10 minutes a week" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>I am an organization nerd. Not only does the thought of going to an office supply store make me giddy, but I have been known to spend a torrid Saturday night wantonly using my label maker on everything in the house.</p> <p>Despite these tidy living bona fides, for years my organizational downfall was financial paperwork.</p> <p>If you find yourself in a similar state of paperwork chaos, not to worry. You can tame the beast without having to sacrifice an entire week to the project. In fact, organizing your paperwork is a job you can handle in 10 minutes a week. Here&rsquo;s how:</p> <h2>1. Know What You Need</h2> <p>The first <a href="http://www.wisebread.com/4-ways-stress-is-killing-your-finances">problem with financial paperwork</a> is the fact that it can be difficult to remember how much of it you need to keep. The specter of an IRS audit is enough to turn anyone into a paperwork hoarder, but keeping everything isn&rsquo;t helpful if you don&rsquo;t know how to find what you need.</p> <p>Before you get started, you need to know what to keep and what to toss.</p> <h3>The One-Year Rule</h3> <p>Most of your day-to-day financial paperwork, such as paycheck stubs, paid bills, bank records, and quarterly investment statements only need to hang around for a year at most. Once you&rsquo;ve received your W2 and annual statement, you can shred paycheck stubs and quarterly investment statements after making sure everything is accurate. Unless your bills and bank records are needed for tax purposes, they can also be shredded after one year.</p> <h3>The Three-Year Rule</h3> <p>You have probably heard that you need to keep all tax-related paperwork for seven years, but that is actually a longer period of time than what the <a href="https://www.irs.gov/Businesses/Small-Businesses-&amp;-Self-Employed/How-long-should-I-keep-records">IRS expects</a> of the average taxpayer. While you are stuck holding onto your annual tax returns indefinitely, the IRS doesn&rsquo;t expect you keep supporting documentation (like mutual fund reports or charitable gift receipts) for more than three years. What&rsquo;s special about the three-year mark? That&rsquo;s the number of years Uncle Sam has to initiate an audit for regular tax returns.</p> <p>Once you&rsquo;ve passed three years, you can shred the records, with a couple of exceptions: First, keep documentation showing the initial purchase price of any stocks or mutual funds you own, because you will need to determine your gains or losses when it comes time to sell. And second, hold onto house records for as long as you live there (or own the place).</p> <h3>The Seven-Year Rule</h3> <p>The IRS can initiate an audit within seven years for any taxpayers who filed a claim for a loss from worthless securities or a bad debt deduction. Taxpayers who don&rsquo;t include up to 25% of their reportable gross income (think servers or other employees who rely on cash tips) should hold onto their records for six years in case of an audit.</p> <h2>2. Start Sorting With Three Folders</h2> <p>Once you understand what can be kept and what can be chucked, it&rsquo;s time to start organizing. The key to 10-minute organizing is the <a href="http://thepeacefulmom.com/2015/03/10/organize-paperwork-fast-a-giveaway/">Quick Sort Method</a>, created by Kimberlee Stokes of The Peaceful Mom. You will need three empty manila folders, labeled NOW, 10 MINUTES A WEEK, and FILE. In addition, you want to warm up your shredder for all the items that don&rsquo;t go in any of these folders.</p> <p>Once you have the system in place, you can leave your three folders in a standing rack right by the trashcan or shredder and sort items the moment they come in the mail.</p> <h3>The NOW Folder</h3> <p>This is where you will put any items that need immediate attention, such as bills to pay, insurance paperwork, license renewals, and the like. When you finish sorting all of your paperwork during this first sort-and-purge stint, you will go through the NOW folder and take care of everything. This will likely take you longer than 10 minutes the first time, but it will set you up to make organizing your paperwork and paying your bills much simpler down the road.</p> <p>As you complete each item in the NOW folder, you can move that paper either to the FILE folder for future filing, or to the shredder. Once you have your system in place, you can put items directly in the NOW folder as you receive them, and take a minute or two each day to empty the folder.</p> <h3>The 10 MINUTES A WEEK Folder</h3> <p>This folder will house all of the items that require some sort of action on your part but don&rsquo;t need immediate attention. For instance, you might put subscription renewals, paperwork that requires input from other family members, items that have no specific deadline, and the like.</p> <p>Once you have taken care of the NOW items, the items in this folder will be the work that you do each week to stay on top of your paperwork and maintain your organized files.</p> <h3>The FILE Folder</h3> <p>Items that you need to file for the future will go into this folder. When you start using this system, the FILE folder will get pretty full, but eventually, you&rsquo;ll find that there is nothing left in the first two folders You will spend your 10 minutes each week filing from this folder.</p> <p>As for the filing, generally you will only need two systems: one for tax documents and one for general financial documents. These two systems do not need to be complex to be useful. Here is how to organize them both:</p> <h2>3. Organizing Tax Documents With Three Folders</h2> <p>Most taxpayers can easily organize their tax documents with three folders. You&rsquo;ll need one each for income, expenses and deductions, and investments.</p> <h3>Folder for Income</h3> <p>If you work a single traditional job and receive electronic paystubs, you may not even need an income folder. But this is essential for those with irregular income, freelancers, contractors, people holding multiple jobs, and anyone who receives income from investments. Having this folder in place will help you keep track of every single penny you earn.</p> <p>Not only should you deposit all paycheck stubs into this folder, but Dayana Yochim of The Motley Fool also recommends <a href="http://www.fool.com/personal-finance/taxes/get-organized-for-the-irs.aspx">recording your earned income</a> on a cover sheet in the folder, as well. This will give you method for checking the accuracy of official documents as they arrive.</p> <h3>Folder for Expenses and Deductions</h3> <p>If you&rsquo;re like most people, you probably throw your receipts, statements, and paid bills into a shoebox to sort through come tax time. It&rsquo;s much easier on your sanity to create an Expenses and Deductions folder with separate sections so you can be more organized throughout the year.</p> <p>For instance, this folder might include sections for business, charitable donations, childcare, and medical expenses. Separating out all of your receipts for expenses and deductions will save you from those horrible moments when you cannot recall why you held onto a particular receipt.</p> <p>It&rsquo;s also a good idea to file a list of common tax deductions in this folder so you can easily remember what you may claim what documents you need to save.</p> <h3>Folder for Investments</h3> <p>Your Investments folder is where you will store the following paperwork:</p> <ul> <li>Records proving your tax-deductible contributions to retirement accounts.<br /> &nbsp;</li> <li>Notices of dividends, and capital gains and losses.<br /> &nbsp;</li> <li>Distribution records you receive when you take money from investment accounts.<br /> &nbsp;</li> <li>Annual statements.</li> </ul> <p>Generally, the IRS will not need all of this paperwork for next year&rsquo;s taxes, but you need this information on hand for future tax returns. For instance, if you sell an investment, you will need to be able to provide paperwork about that investment, and having it filed by year for future reference will make your life much easier.</p> <h3>Organize Tax Information by Year</h3> <p>Once you have filed your taxes each year, it&rsquo;s a good idea to then create a file folder labeled with the year, where you place everything from your three tax folders. Each year, you can also go through your four-year-old (or eight-year-old) tax file folder and purge the documents that you no longer need. Remember, you should keep the actual return for each year &mdash; it&rsquo;s only the supporting documents that can be shredded after the end of either three or seven years.</p> <h2>4. Organize General Financial Documents Alphabetically</h2> <p>For all of your general financial documents, the easiest filing system is the one recommended by David Allen in <a href="http://amzn.to/1QFBfpg">Getting Things Done</a> &mdash; file your paperwork alphabetically in hanging folders. It is much easier to find the specific paperwork you need if you know to look for a cable bill under C for Comcast, rather than trying to root through a huge folder labeled Utilities.</p> <h2>5. Maintaining Your Paperwork Organization</h2> <p>Organization is a process, not an event. Creating these folders will not actually help you end the paperwork pile-up if you can&rsquo;t maintain it. Here are two ways to make sure you keep up with your 10 minutes per week:</p> <h3>1. Put Documents Where You Naturally Store Them</h3> <p>We all have a tendency to let our paperwork pile up in a particular spot in our home, such as the kitchen counter or the coffee table. One of the problems with attempting to get organized is that we often try to rehome our paperwork in a &ldquo;better&rdquo; place than where things naturally gather, and so we spend an afternoon creating a paperwork station in the spare bedroom.</p> <p>But you&rsquo;re not going to schlep the mail upstairs every day after work, so don&rsquo;t expect a filing system to be sustainable up there. Create a system in the place where you naturally gravitate, because it is easier to maintain a habit that is based on the way you already use your space.</p> <h3>2. Schedule 10 Minutes of Organization Per Week</h3> <p>Organizing financial paperwork is an important but not urgent task, so you can easily fall into the &ldquo;I&rsquo;ll just do it later&rdquo; trap. The trick to keeping up with your organization is to schedule it the same way you would a meeting or conference call.</p> <p>Unless you schedule a specific time and protect it from other commitments, you&rsquo;re likely to lose momentum. Figure out when your 10 minutes will be spent, write it on your calendar, and keep the appointment with yourself. You&rsquo;ll be glad you did.</p> <p><em>How do you keep your important documents organized?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/how-to-organize-your-paperwork-in-just-10-minutes-a-week">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-simple-ways-to-save-money-by-tracking-your-receipts">6 Simple Ways to Save Money by Tracking Your Receipts</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/to-shred-or-not-to-shred-how-long-to-keep-your-tax-records">To Shred or Not to Shred: How Long to Keep Your Tax Records</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/organizing-your-financial-paperwork">Organizing Your Financial Paperwork</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/25-things-to-throw-out-today">25 Things to Throw Out Today</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-easy-ways-to-keep-your-family-organized">8 Easy Ways to Keep Your Family Organized</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Organization audit bills cleaning documents filing paperwork taxes Wed, 30 Dec 2015 14:00:03 +0000 Emily Guy Birken 1626821 at http://www.wisebread.com Best Money Tips: Tax Audit Flags http://www.wisebread.com/best-money-tips-tax-audit-flags <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-tax-audit-flags" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/stress-155010475.jpg" alt="stress" title="stress" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Welcome to Wise Bread&#39;s <a href="http://www.wisebread.com/topic/best-money-tips">Best Money Tips</a> Roundup! Today we found some fantastic articles on tax audit flags, tips for lowering your heating bill, and tips for easing back into work after vacation.</p> <h2>Top 5 Articles</h2> <p><a href="http://www.thewisdomjournal.com/Blog/25-tax-audit-flags/">25 Tax Audit Flags</a> &mdash; Drastic income changes and off the charts itemized deductions can be tax audit red flags. [The Wisdom Journal]</p> <p><a href="http://firefinance.blogspot.com/2008/10/save-energy-lower-heating-bill.html?utm_source=feedburner&amp;utm_medium=feed&amp;utm_campaign=Feed%3A+FireFinance-FinancialIndependenceRetireEarly+%28FIRE+Finance+-+Financial+Independence+Retire+Early%29">12 Tips to Lower Your Heating Bill</a> &mdash; To save money on your heating bill, clear your heating vents and winterize your windows. [FIRE Finance]</p> <p><a href="http://www.savvysugar.com/Things-Do-After-Vacation-23383346">6 Tips For Easing Back Into Work After Vacation</a> &mdash; When going back to work after vacation, make the transition easier by getting in earlier and making a to-do list. [PopSugar Smart Living]</p> <p><a href="http://christianpf.com/financial-options/">How to See Beyond the Obvious Financial Options</a> &mdash; If you want to see beyond the obvious financial options, practice creative thinking. [Christian PF]</p> <p><a href="http://canadianfinanceblog.com/starting-a-home-business/">Increase Your Income by Starting a Home Business</a> &mdash; Want to start your own home business? Make sure you understand the paperwork and tax implications. [Canadian Finance Blog]</p> <h2>Other Essential Reading</h2> <p><a href="http://bargainbabe.com/joint-vs-separate-bank-accounts-married-couples-right/">Joint or separate bank accounts for couples - which is better?</a> &mdash; When couples have joint bank accounts, it encourages financial discussions and removes the hassle of splitting costs. [Bargain Babe]</p> <p><a href="http://financialhighway.com/money-saving-tricks-anyone-can-use/">Money-Saving Tricks Anyone Can Use</a> &mdash; To save money on clothes, make sure to use an apron when cleaning. That way your clothes don&#39;t get trashed. [Financial Highway]</p> <p><a href="http://www.inkjetwilly.com/blog/super-bowl-printables/">Super Bowl Printables: 7 Free Sites</a> &mdash; If you are looking for Super Bowl printables, try Snap Creativity or Hostess With The Mostess. [InkJet Willy]</p> <p><a href="http://parentingsquad.com/6-kid-friendly-ways-to-celebrate-the-super-bowl-without-watching-the-big-game">6 Kid-Friendly Ways to Celebrate the Super Bowl (Without Watching the Big Game)</a> &mdash; Teaching your kids to play flag football is just one kid-friendly way to celebrate the Super Bowl. [Parenting Squad]</p> <p><a href="http://staplerconfessions.com/index.php/my-kind-of-diy-easy-car-repairs/">My Kind of DIY: Easy Car Repairs</a> &mdash; Installing windshield wipers is a car repair you can easily do on your own. [Stapler Confessions]</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ashley-jacobs">Ashley Jacobs</a> of <a href="http://www.wisebread.com/best-money-tips-tax-audit-flags">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-your-chances-of-getting-audited-by-the-irs-your-guess-is-probably-wrong">What are your chances of getting audited by the IRS? Your guess is probably wrong</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/ring-ring-ka-ching-lying-about-your-telephone-tax">Ring. Ring. Ka-ching! Lying About Your Telephone Tax</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/bushs-economic-stimulus-package-what-will-you-get-back">Bush&#039;s economic stimulus package; What will you get back?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-organize-your-paperwork-in-just-10-minutes-a-week">How to Organize Your Paperwork in Just 10 Minutes a Week</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/101-tax-deductions-for-bloggers-and-freelancers">101 Tax deductions for bloggers and freelancers</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes audit best money tips flags red flags tax taxes Thu, 30 Jan 2014 11:00:11 +0000 Ashley Jacobs 1121283 at http://www.wisebread.com Best Money Tips: IRS Audit Red Flags http://www.wisebread.com/best-money-tips-irs-audit-red-flags <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-irs-audit-red-flags" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/6757831463_0103c636e7_z.jpg" alt="tax form" title="tax form" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Welcome to Wise Bread's <a href="http://www.wisebread.com/topic/best-money-tips">Best Money Tips</a> Roundup! Today we found some fantastic articles on IRS audit red flags, ways to spring-clean your finances, and hidden costs of DIY moving.</p> <h2>Top 5 Articles</h2> <p><a href="http://www.kiplinger.com/slideshow/taxes/T056-S001-irs-audit-red-flags-the-dirty-dozen-slide-show/index.html">IRS Audit Red Flags: The Dirty Dozen</a> &mdash; If you want to avoid an IRS audit, don't take large charitable deductions. [Kiplinger]</p> <p><a href="http://money.msn.com/frugal-living/post.aspx?post=ee70b323-7a29-451d-b921-bc52cc27743b&amp;ref=bfv">8 ways to spring-clean your finances</a> &mdash; As you spring-clean your common areas this year, remember the frugal takeaway that if your posessions no longer register, they can't matter that much. [MSN Money]</p> <p><a href="http://www.moneytalksnews.com/2013/03/15/5-hidden-costs-of-diy-moving/">5 Hidden Costs of DIY Moving</a> &mdash; When doing a DIY move, be prepared for the hidden cost of environmental fees and mileage. [Money Talks News]</p> <p><a href="http://www.freemoneyfinance.com/2006/09/how_to_get_rich.html">How to Get Rich in Three Easy Steps</a> &mdash; Spending less than you earn will help you get rich. [Free Money Finance]</p> <p><a href="http://www.bargaineering.com/articles/5-alternatives-foreclosure.html">5 Alternatives to Foreclosure</a> &mdash; Avoid a foreclosure by opting for a short sale. [Bargaineering]</p> <h2>Other Essential Reading</h2> <p><a href="http://onecentatatime.com/stop-some-hidden-charges/">Some Hidden Charges and How to Stop Them</a> &mdash; Watch out for hidden insurance charges by making sure you aren't paying for more than you need. [One Cent at a Time]</p> <p><a href="http://www.creditsesame.com/blog/ways-to-sell-your-home/">6 Ways to make Homebuyers Bite</a> &mdash; To get homebuyers to bite, clean up your yard. [Credit Sesame]</p> <p><a href="http://www.bloomberg.com/ss/10/10/1008_first_time_managers/1.htm">20 Tips for First-Time Managers</a> &mdash; Communication is key when it comes to managing your business. [Bloomberg]</p> <p><a href="http://www.savvysugar.com/Tips-Having-More-Patience-28495875">Compose Yourself: 10 Tips For Having More Patience</a> &mdash; Practicing active listening can help you have more patience. [PopSugar Smart Living]</p> <p><a href="http://parentingsquad.com/6-sweet-spring-baby-shower-themes">4 Sweet Spring Baby Shower Themes</a> &mdash; If you need a theme for a spring baby shower, consider going with a garden party. [Parenting Squad]</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ashley-jacobs">Ashley Jacobs</a> of <a href="http://www.wisebread.com/best-money-tips-irs-audit-red-flags">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-your-chances-of-getting-audited-by-the-irs-your-guess-is-probably-wrong">What are your chances of getting audited by the IRS? Your guess is probably wrong</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/ring-ring-ka-ching-lying-about-your-telephone-tax">Ring. Ring. Ka-ching! Lying About Your Telephone Tax</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird tax deductions</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/taxes-on-irregular-income">Taxes on irregular income</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-things-the-irs-doesnt-want-you-to-know-about-them">6 Things the IRS Doesn&#039;t Want You to Know About Them</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes audit best money tips IRS taxes Mon, 18 Mar 2013 11:00:35 +0000 Ashley Jacobs 971317 at http://www.wisebread.com To Shred or Not to Shred: How Long to Keep Your Tax Records http://www.wisebread.com/to-shred-or-not-to-shred-how-long-to-keep-your-tax-records <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/to-shred-or-not-to-shred-how-long-to-keep-your-tax-records" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_000009045692Small2.jpg" alt="Man overwhelmed by documents" title="Man overwhelmed by documents" class="imagecache imagecache-250w" width="250" height="134" /></a> </div> </div> </div> <p>Maybe you've heard of that seven-year rule? It says that you should keep all your receipts and records for at least seven years. That's not true in all cases, but knowing what you should keep, and how long you should keep it, can be confusing and complicated. According to the IRS website, there are no hard and fast rules on <a href="http://www.goodfinancialcents.com/how-long-should-you-keep-bank-financial-tax-statements/">how long you should hang onto documents</a>. Nor are there rules for how you should keep them (paper copies, online, or scanned and stored to a hard drive). You will just need to have access to them if you should ever get audited or need them for other purposes. (See also: <a href="http://www.wisebread.com/6-quick-tips-for-organizing-your-finances">6 Quick Tips for Organizing Your Finances</a>)</p> <h3>The Tax-Review Period</h3> <p>The basic period for IRS tax review is three years. Yes, that means that even if you filed your taxes this year, got your refund or paid your taxes due, the IRS can audit you for up to three years. If it is suspected that you filed a fraudulent claim, or you owe more taxes, there is a chance you could be asked to show some documentation. So a good rule of thumb is to keep everything related to your taxes for <em>at least</em> three years.</p> <h3>Special Circumstances</h3> <p>Outside of the three-year tax review window, there are other reasons that you could be audited or asked to show your tax documents. The length of time the IRS has to ask for these documents varies. Here are some examples:</p> <ul> <li>If you goofed on reporting your income by more then 25%, the IRS can audit you and ask to see proof of income for up to six years. So it's a good idea to hang onto your tax-related documents if you think you may have under-reported your income in any way.<br /> &nbsp;</li> <li>If you <a href="http://www.goodfinancialcents.com/file-tax-return-what-happens-when-you-dont-penalties/">didn't file a return but should have</a>, you need to keep your tax records indefinitely.<br /> &nbsp;</li> <li>If you <a href="http://www.goodfinancialcents.com/how-to-file-an-amended-tax-return/">amended your tax return</a> to get an additional refund, you should keep your tax records for three years from the date of your amended return.<br /> &nbsp;</li> <li>If you filed a fraudulent return, there is no limit on how long you should hang onto your tax records.<br /> &nbsp;</li> <li>If you claimed a loss from a worthless security, then you need to hold onto those records for seven years.</li> </ul> <h3>Other Reasons to Keep Records</h3> <p>Even if you don't need some of your records for IRS purposes anymore, you may want to consider if you need them for another reason before tossing them. For instance, you may need documents related to your home for insurance purposes. If you own an item or piece of property, it's a good idea to hang onto any documentation related to those items. You could find yourself needing them for a warranty or return.</p> <p>It's also a good idea to hang onto your past income tax returns. There are so many programs that require proof of income, such as food stamps and medical aid assistance, and usually furnishing a past tax return is all the proof you need. It's also helpful in having past tax returns to prepare future returns.</p> <p>When we decided to build our first home a few years back, our bank was a stickler about having proof of income &mdash; primarily because I had recently transitioned to the realm of the self-employed. I had to provide both proof of income as well as a recently filed tax return.</p> <p>In any case, it's a good idea to hang onto all tax records for at least the three-year period that you could be <a href="http://www.wisebread.com/how-to-survive-a-tax-audit">audited</a>.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/jeff-rose">Jeff Rose</a> of <a href="http://www.wisebread.com/to-shred-or-not-to-shred-how-long-to-keep-your-tax-records">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-organize-your-paperwork-in-just-10-minutes-a-week">How to Organize Your Paperwork in Just 10 Minutes a Week</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/tax-document-checklist-what-to-gather-before-doing-your-taxes">Tax Document Checklist: What to Gather Before Doing Your Taxes</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/do-i-have-to-report-this-income-0">Do I Have to Report This Income?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/five-easy-steps-to-keeping-track-of-expenses-for-the-self-employed">Five Easy Steps to Keeping Track of Expenses for the Self-Employed</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Organization Taxes audit filing tax records Wed, 27 Jul 2011 10:24:05 +0000 Jeff Rose 629785 at http://www.wisebread.com Why Small Business Owners Feel High Tax Burden http://www.wisebread.com/small-business/why-small-business-owners-feel-high-tax-burden <div class="field field-type-link field-field-url"> <div class="field-label">Link:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <a href="http://www.openforum.com/idea-hub/topics/money/article/why-small-business-owners-feel-a-high-tax-burden" target="_blank">http://www.openforum.com/idea-hub/topics/money/article/why-small-business-owners...</a> </div> </div> </div> <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/small-business/why-small-business-owners-feel-high-tax-burden" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_000007560334Smallc.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Have you seen the proposed new tax form?</p> <ul> <li>Line 1 = Enter income from all sources</li> <li>Line 2 = Send it in</li> </ul> <p>This time of year, you&rsquo;re probably not laughing.</p> <p>A friend called in tears last week. She&rsquo;d just spent a week doing tax prep work for her annual meeting with her accountant &mdash; enough to make any grown person cry. She was just about to print the final reports for her morning meeting when she noticed the puddle of ink under the printer. It was the second printer to fail in a week, the result of a leaky store-brand ink cartridge.</p> <p>Lots of people are cranky this time of year thanks to our 10,000+ page tax code. A survey by the National Federation of Business (NFIB), the nation&rsquo;s leading small business association, found that four of its members' top ten concerns were tax-related. Health insurance topped the list.</p> <p>Another survey, just-released by the <a target="_blank" href="http://www.nsba.biz/">National Small Business Association</a> (NSBA), found that more than a third of business owners (38%) spend two weeks a year dealing with federal taxes. Because of the complexity of the tax code, and fear of audit, almost nine in ten pay an outsider to prepare their returns.</p> <p>The small business tax burden, both financial and administrative is overwhelming, and it&rsquo;s not likely to improve any time soon. Just last month, the SBA Office of Advocacy determined that the study behind the IRS&rsquo;s focus on small businesses as the nation's <a target="_blank" href="http://www.openforum.com/idea-hub/topics/money/article/the-tax-gap-squeezehow-to-avoid-it-anita-campbell">biggest tax cheats, was significantly flawed</a>. And, at a time when more people are trying to earn a freelance living than at any other period in modern history &mdash; often the result of being laid off &mdash; Uncle Sam is targeting the companies that hire them, claiming they&rsquo;re <a target="_blank" href="http://www.openforum.com/idea-hub/topics/money/article/irs-wants-its-7-billion-from-independent-contractor-misclassifications-kate-lister">employees, not contractors</a>.</p> <p>Happily, one particularly egregious example of this tax-happy trend looks like it&rsquo;s headed for repeal. Buried in the 2,400-page Patient Protection and Affordable Care Act that passed last year, was an expanded 1099 reporting requirement would have buried small businesses in unnecessary paperwork.</p> <p>Right now businesses are required to send 1099&rsquo;s to any unincorporated service provider they pay more than $600 a year. The new healthcare law would have added corporations to the 1099 hit list and it would have added payments for goods and property to the burden. That $699 iPad, for example, would mean a 1099 to Apple. For a typical small business that mails an average of sixteen year-end 1099s, the new law would increase that number eleven-fold (NSBA estimate).</p> <p>What the heck is a change to 1099 reporting requirements doing in a healthcare bill anyway? Fortunately, that&rsquo;s a question that NFIB, NSBA and others asked too. Thanks to their efforts, both houses of congress have called for a repeal of that part of the bill. The final nail in the coffin, the President&rsquo;s signature, is expected shortly.</p> <p>Small business may have won this recent battle, but with Federal, state, and local governments desperate for money, the war is far from over.</p> <p>More than ever, small business owners need to stay informed about regulations, taxes, and other laws that could affect them; and they need to make their voice heard. Here&rsquo;s how to do both:</p> <ul> <li>Subscribe to the SBA Office of Advocacy&rsquo;s <a target="_blank" href="http://weblog.sba.gov/blog-advo/">Small Business Watchdog Blog</a> or visit Advocacy&rsquo;s <a target="_blank" href="http://www.sba.gov/advocacy/815">regulatory alerts page</a>;</li> <li>Submit comments on proposed regulations to <a target="_blank" href="mailto:advocacy@sba.gov">advocacy@sba.gov</a>;</li> <li>Report unfair regulatory enforcement to SBA&rsquo;s Office of the National Ombudsman at <a target="_blank" href="mailto:ombudsman@sba.gov">ombudsman@sba.gov</a>;</li> <li>Join the<a target="_blank" href="http://nfib.com/"> National Federation of Independent Business</a> (be sure to participate in their web site polls) and/or the <a target="_blank" href="http://nsba.biz/">National Small Business Association</a>;</li> <li>Join your industry trade association;</li> <li>Tell your Congressmen and Senators what you think;</li> <li>And, of course, stay tuned to American Express Open Forum.</li> </ul> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/kate-lister">Kate Lister</a> of <a href="http://www.wisebread.com/small-business/why-small-business-owners-feel-high-tax-burden">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/250-tips-for-small-business-owners">250+ Tips for Small Business Owners</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-your-chances-of-getting-audited-by-the-irs-your-guess-is-probably-wrong">What are your chances of getting audited by the IRS? Your guess is probably wrong</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/ring-ring-ka-ching-lying-about-your-telephone-tax">Ring. Ring. Ka-ching! Lying About Your Telephone Tax</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/worried-about-an-audit-six-irs-red-flags">Worried About an Audit? Six IRS Red Flags</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-survive-a-tax-audit">How to Survive a Tax Audit</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Small Business Resource Center audit IRS NFIB NSBA small business small business taxes Tax Foundation Thu, 21 Apr 2011 20:27:39 +0000 Kate Lister 524255 at http://www.wisebread.com How to Survive a Tax Audit http://www.wisebread.com/how-to-survive-a-tax-audit <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-survive-a-tax-audit" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_000006064047Smallc.jpg" alt="woman checking finances" title="woman checking finances" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Imagine walking up to your mailbox today and finding a letter from the IRS. You filed your taxes nice and early and have eagerly been awaiting your refund check. Could this be it? Nope, it's a notice of an income tax audit. Your eyes bug out. Audit?! Isn't that only for crooks?</p> <p>About 1% of all people are audited and there are some things you may have done to <a href="http://www.wisebread.com/top-10-red-flags-that-trigger-irs-audits">trigger the audit</a>. But don't worry just yet. While scary at first, it's probably not as bad as you think and there are actions you can take do to prepare for the audit. Here is a list of ways to survive your tax audit. (See also: <a href="http://www.wisebread.com/6-great-places-to-get-free-tax-advice">6 Great Places to Get Free Tax Advice</a>)</p> <h3>1. Take a Deep Breath</h3> <p>Unless you've knowingly deceived the IRS, you probably won't be in big trouble. The IRS is likely looking for clarification of a specific portion of your audit and the possible scenarios probably aren't as bad as you're imagining. The mostly likely bad scenario is that you'll have to pay a little more in taxes for income that accidentally went unreported or an expense that you don't have the proper documentation for. Two thirds of audits are conducted entirely by mail, so even if you're audited, you'll likely still be able to take care of this without feeling like you're on trial.</p> <h3>2. Read the Document Carefully</h3> <p>What type of audit is this? There are <a href="http://www.irs.gov/individuals/article/0,,id=136857,00.html">three types of audits</a>, the simplest being a <strong>correspondence audit</strong>, which simply asks for clarification of some portion of your tax return (possibly the forms you submitted don't match up with what you employer or bank submitted). These can be solved over the phone or by mail.</p> <p>An <strong>office audit</strong> is a bit more involved, but is still usually restricted to a specific item on your return. You'll have to go in and show proof of your numbers, but in most cases, you can do the proper research beforehand.</p> <p>A <strong>field audit</strong> is conducted at the home or office and are generally only done for complicated tax filings that involve business operations. It's definitely the most invasive, but if you're not hiding anything, it can be beneficial to clear you of any wrongdoing.</p> <p>Typically, only a portion of your tax return will be examined in more detail. Finding out what they are looking for will help you determine how much work you need to do and which documentation you'll need to find.</p> <h3>3. Respond Promptly</h3> <p>If you don't respond to your audit notice within 30 days, you'll lose the opportunity to defend yourself to the IRS. Then the agent will send you a bill for the amount they think you owe, and your non-response is the equivalent of agreeing with their assessment. You can get an extension, but responding to their request is a must.</p> <h3>4. Gather Your Documents</h3> <p>If they are going to question you about your deductions, you're going to need to explain how you got to a certain number and for proof of how you got there. Saying you spent about $200 in gas plus another $500 in airfare won't cut it. Get out those receipts, print those email confirmations, and build your case around irrefutable evidence. If you can't prove it, they won't accept it and you'll be left paying taxes on an extra $700 you thought you could deduct.</p> <h3>5. Know Your Rights</h3> <p>Don't go in blindly hoping for the best. <a href="http://www.irs.gov/pub/irs-pdf/p1.pdf">Know your rights</a>, because taking advantage of them could save you a lot of time and stress. For example, did you know you can take a sound recording of any meetings (provided you let them know in writing 10 days beforehand) and that you have a right to ask that the examination take place at a reasonable time and place that is convenient for all parties? You don't have to go running to them just to have them try and take money away from you!</p> <h3>6. Don't Be Afraid to Get Help</h3> <p>You don't have to go about this alone. If the issue isn't a simple error than you can easily fix yourself, consider hiring a tax professional with audit experience. Not only can audits cost you what the IRS feels you owe, they can also be very time consuming, so the combination sometimes means it's often better to pay someone who can give unbiased help and build a solid case for you.</p> <p>While the process certainly won't be fun, the outlook probably isn't as bad as it may seem at first. As long as you're not intentionally fudging your numbers (and possibly if you are), the penalty will likely be minimal. Follow these tips and your scary experience will be a lot less nerve-wracking!</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/daniel-packer">Daniel Packer</a> of <a href="http://www.wisebread.com/how-to-survive-a-tax-audit">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-your-chances-of-getting-audited-by-the-irs-your-guess-is-probably-wrong">What are your chances of getting audited by the IRS? Your guess is probably wrong</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/ring-ring-ka-ching-lying-about-your-telephone-tax">Ring. Ring. Ka-ching! Lying About Your Telephone Tax</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/worried-about-an-audit-six-irs-red-flags">Worried About an Audit? Six IRS Red Flags</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/surprise-5-reasons-you-might-not-get-your-tax-refund">Surprise! 5 Reasons You Might Not Get Your Tax Refund</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes audit filing taxes IRS Mon, 28 Mar 2011 10:00:05 +0000 Daniel Packer 511977 at http://www.wisebread.com Do I Have to Report This Income? http://www.wisebread.com/do-i-have-to-report-this-income-0 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/do-i-have-to-report-this-income-0" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/bank_on_desk.jpg" alt="Piggy bank" title="Piggy bank" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p>Today we're going to play a game called &quot;Do I Have to Report This Income?&quot; It will teach us a little about tax filing requirements and present some interesting situations about what income is taxable and what can be left off a tax return.</p> <p>When doing taxes, there are a ton of ways to get around reporting income. How can the IRS track cash transactions? Nobody will report a few items you sell online, right?</p> <p>While it may be easy to hide some money from the government, there can be serious repercussions. If caught, it could cost you a lot more in the long-term. (See also: <a href="http://www.wisebread.com/top-10-red-flags-that-trigger-irs-audits">Top 10 Red Flags That Trigger IRS Audits</a>)</p> <p>So if you're one of those trustworthy folks and are trying to file your taxes properly, you should be aware of which income you have to report.</p> <p>Ready to learn what you need to include as income on your taxes? The questions will get increasingly harder, but I think&nbsp;you will catch on fairly quickly.</p> <h4>1. I just received a W-2 from work. It lists all my earnings for the year. Do I have to report this income?</h4> <p>Definitely! Your employer sends one copy to you and sends another one to the IRS. If the amount of income from your employer that you report doesn't line up with the amount your employer reports, it will raise a red flag and you will be more likely to be audited.</p> <h4>2. I made about $6 in one of my savings accounts this year. I also made another $7 in a separate account. Do I have to report this income?</h4> <p>If you earned over $10 in a bank account, you will likely be issued a 1099-INT. However, even if you aren't issued a tax form, you are still responsible for reporting it, no matter how small. You still earned it and are therefore responsible for reporting the income.</p> <h4>3. I just sold a watch on eBay. They took fees out. Do I have to report this income?</h4> <p>While these transactions are a good way to earn some extra cash, you are still earning some income in the process, so you technically have to report it. The fees that <a href="http://www.wisebread.com/secrets-of-top-ebay-sellers">eBay</a> takes out are fees for using their service and have nothing to do with taxes.</p> <h4>4. I love my tutoring job; I get paid in cash! Do I have to report this income?</h4> <p>With no W-2 or 1099, there's no paper trail and that means you can just pocket the cash, right? Wrong! You are responsible for keeping your own records. In fact, you may need to make <a href="http://sweatingthebigstuff.com/federal-and-state-estimated-quarterly-tax-payments-are-due/">estimated quarterly tax payments</a>! Suddenly, no paper trail really means more responsibility for you!</p> <h4>5. Yay! I just won a prize on a blog! Just a small gift card, but I'm super pumped! Do I have to report this income?</h4> <p>Congrats on your luck, but guess what? You have to count the value of the <a href="http://www.wisebread.com/6-ways-to-win-free-stuff-from-blog-giveaways">prize</a> as income. So while you definitely come out ahead, you still have to pay taxes on that gift card. if it's a big prize, you may want to set aside some cash because&nbsp;you'll likely owe the government money come tax time.</p> <p>By now, I'm sure you've caught on that you need to report all income you earn in any form. Hopefully I've hit on a few situations that most people don't consider, and now you'll be better prepared when filing your taxes in the coming weeks. Good luck!</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/daniel-packer">Daniel Packer</a> of <a href="http://www.wisebread.com/do-i-have-to-report-this-income-0">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird tax deductions</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-surprising-facts-about-income-tax">15 Surprising Facts About Income Tax</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-your-chances-of-getting-audited-by-the-irs-your-guess-is-probably-wrong">What are your chances of getting audited by the IRS? Your guess is probably wrong</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/ring-ring-ka-ching-lying-about-your-telephone-tax">Ring. Ring. Ka-ching! Lying About Your Telephone Tax</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-signs-you-probably-need-an-accountant">5 Signs You Probably Need an Accountant</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Career and Income Taxes audit income taxes selling on ebay Mon, 14 Mar 2011 11:36:11 +0000 Daniel Packer 503127 at http://www.wisebread.com 8 Invitations to an IRS Tax Audit http://www.wisebread.com/small-business/8-invitations-to-an-irs-tax-audit <div class="field field-type-link field-field-url"> <div class="field-label">Link:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <a href="http://www.openforum.com/idea-hub/topics/money/article/8-invitations-to-an-irs-audit-kate-lister" target="_blank">http://www.openforum.com/idea-hub/topics/money/article/8-invitations-to-an-irs-a...</a> </div> </div> </div> <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/small-business/8-invitations-to-an-irs-tax-audit" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_000005449135XSmall.jpg" alt="Red flag" title="Red flag" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>If you aren&rsquo;t thinking about a tax audit, you should be. They can be a nightmare even if you&rsquo;re completely honest.</p> <p>Thanks to the staggering federal deficit, the IRS is trying to close the $300 billion gap between what Americans pay in taxes and what the government thinks we should have paid. You aren&rsquo;t paranoid if someone is really out get you, as the saying goes, and the IRS <i>is</i> out to get you.</p> <p>Consider this recent IRS job posting:</p> <blockquote><p><b>Internal Revenue Agent (Abusive Transactions Group) </b></p> <p><em>Agents of the Abusive Transactions Group will be conducting examinations of individuals, sole proprietorships, small corporations, partnerships and fiduciaries.</em></p> <p><em>This group specifically goes after taxpayers who generally have higher incomes than most taxpayers, need to file more tax forms, and generally need to rely more on paid tax preparers.</em></p> </blockquote> <p>But even if you aren&rsquo;t wealthy, don&rsquo;t operate a cash business, and you don&rsquo;t have a CPA filing reams of forms for you, you still can easily become an IRS target.</p> <p>Twice as many tax returns were audited in 2009 as 2000. Enforcement revenue over the same period was up 50%.</p> <p>It&rsquo;s important to note that in this land of equality, not all individuals or companies are treated equally when it comes their chances of an audit. About one in a hundred businesses with less than $10 million in assets is audited. That number jumps to 10 in a hundred for those with $10-$50 million in assets, and 1 in 4 for businesses with assets greater than $250 million.</p> <p>Certain industries are scrutinized more heavily too. You can probably guess some of them &mdash; cash businesses are always high on the IRS hit list. But would you suspect Dr. Doggie, the vet, is a target too? It turns out the IRS has a special auditor guidebooks for veterinarians, and for ministers, laundromats, car dealers, and many others too. Their Retailer Guide offers specific strategies for interrogating e-commerce businesses, gas stations, direct sellers, mobile food vendors, pizza shops, and the like.</p> <p>You can read all about how auditors are instructed to look for tax cheats in these <a href="http://www.irs.gov/businesses/small/article/0,,id=108149,00.html">publicly available guides</a>. They&rsquo;re not easy reading like a John Grisholm novel, but they will make the hair on your neck stand on end. Here are some &quot;red flags&quot; that commonly trigger an audit.</p> <h3>1. Math Errors</h3> <p>While an error in basic math might not instigate a full blown line-item audit, it&rsquo;s the most common reason Americans receive those heart-attack inducing letters from their friendly local IRS office. Use a calculator and check your numbers twice.</p> <h3>2. Unusually High Itemized Deductions</h3> <p>The IRS uses a very secret formula to calculate what your deductions should be. If computer scan of your returns shows that your deductions for charity, travel and entertainment, and healthcare are out of line with your income, you&rsquo;ll be on their radar.</p> <h3>3. Self-Employed/Schedule C Filers</h3> <p>Small businesses are suspected of being especially creative with their expenses. Be careful if you take a home office deduction, have lost money for several years in a row, and prepare your returns yourself rather than use an accountant.&nbsp;</p> <h3>4. Lots of 1099s</h3> <p>In February of 2010, in hopes of adding billions to depleted U.S. Treasury coffers, the IRS began a three-year initiative to crack down on what they believe to be a common practice of misclassifying employees as contractors.</p> <p>Six thousand businesses have already been targeted for audit, and the government hopes to hire 100 new Department of Labor employees specifically to police these abuses. And yes, the do share their successes with the IRS and State authorities.</p> <h3>5. Unreported Income</h3> <p>Be especially careful to report all your income. If you&rsquo;ve received a 1099, so has the IRS and their computers will notice if they don&rsquo;t match up.</p> <p>The same is true for other sources of income. If your former spouse reports alimony paid and you don&rsquo;t report receiving it, you&rsquo;ve just painted a big bull&rsquo;s-eye on your tax return.</p> <h3>6. Previously Audited</h3> <p>If you&rsquo;ve been audited in the past don&rsquo;t think you&rsquo;re off the hook &mdash; especially if you owed taxes or fines. The IRS knows people have the mistaken impression that the auditor won&rsquo;t come knocking twice. But, of course, just the opposite is true.</p> <h3>7. Shareholder</h3> <p>If you are an investor in a partnership or corporation that came under the gimlet eye of the Feds, you may be next in line.</p> <h3>8. Pissed Someone Off</h3> <p>Disgruntled former employees are a regular source of IRS tips. But payback isn&rsquo;t the only reason people go the IRS &mdash; the agency is authorized by law to pay rewards to informants. In cases that involve huge amounts of money, the informant&rsquo;s cut can be as high as 30% of what they collect.</p> <p>Make no mistake, your IRS auditor won&rsquo;t be jolly.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/kate-lister">Kate Lister</a> of <a href="http://www.wisebread.com/small-business/8-invitations-to-an-irs-tax-audit">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/101-tax-deductions-for-bloggers-and-freelancers">101 Tax deductions for bloggers and freelancers</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/250-tips-for-small-business-owners">250+ Tips for Small Business Owners</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-ways-the-government-pays-you-to-live-green">11 Ways the Government Pays You to Live Green</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-credit-cards-for-small-businesses">The 5 Best Credit Cards for Small Businesses</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Entrepreneurship Small Business Resource Center Taxes 1099-C audit deductions small business small business taxes Mon, 10 Jan 2011 12:57:43 +0000 Kate Lister 409372 at http://www.wisebread.com Worried About an Audit? Six IRS Red Flags http://www.wisebread.com/worried-about-an-audit-six-irs-red-flags <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/worried-about-an-audit-six-irs-red-flags" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/warning-sign_0.JPG" alt="Warning sign" title="Warning sign" class="imagecache imagecache-250w" width="250" height="172" /></a> </div> </div> </div> <p>Around February, my commute home starts to give me a knot in my stomach. That&rsquo;s because my bus passes a tax-preparation shop where, as tax season draws nearer, a woman stands outside wearing a Lady Liberty costume and holding a sign that promotes the shop&rsquo;s services. <em>Oh, great</em>, I think, <em>it&rsquo;s time to dance with the IRS again</em>.</p> <p>I don&rsquo;t know why, but the idea of doing taxes terrifies me. All those forms requiring detailed numbers and asking questions I don&rsquo;t quite understand &mdash; <a href="http://www.divinecaroline.com/22354/71652-avoiding-costly-last-minute-tax-mistakes">there&rsquo;s so much room for error</a>! The consequences of messing up are even more intimidating. I&rsquo;ve never been audited by the IRS (knock on wood), but I can imagine it&rsquo;s a nerve-wracking process. However, even crossing all my Ts and double-checking my math doesn&rsquo;t guarantee an audit-free year. As a tax novice, I decided to read up on the matter, and now that I&rsquo;ve done some homework, it&rsquo;s clear that a few factors make the IRS more likely to pay extra attention to your tax papers.</p> <p><strong>1. Making Too Many Errors</strong></p> <p>According to Jeff Schnepper, a writer for MSN Money, one of the most common reasons <a href="http://www.divinecaroline.com/22287/68466-do-professional-tax-help-">tax forms get scrutinized</a> is that they&rsquo;re riddled with math errors, incorrect spelling, typos, and so forth. The first line of defense against an audit is not giving the IRS a reason to look twice. Remember that the IRS receives financial records from your bank and anyone you&rsquo;ve earned a paycheck from, so make sure that you&rsquo;re providing that same information &mdash; numbers that don&rsquo;t match up are suspicious.</p> <p><strong>2. Being Self-Employed</strong></p> <p>Sorry, <a thref="http://www.divinecaroline.com/22287/92223-think-smart--big--tax-tips">owners of small businesses and freelancers</a> &mdash; the IRS tends to look closely at your information. First, it needs proof that you&rsquo;re running a for-profit operation, not a hobby. Second, it wants to make sure that you&rsquo;re reporting income accurately and that the small-business deductions you take are accurate and fair (i.e., not claiming personal expenses as business write-offs). Also, if your company&rsquo;s taken a significant financial hit, that sets off a mini-alarm for the IRS, since it&rsquo;s possible that you&rsquo;ve been misrepresenting figures. Sandra Block, a writer for <em>USA Today</em> who covered this topic in 2000, recommends providing an explanation, along with tax papers, to avoid raising any red flags.</p> <p><strong>3. Not Fitting the Mold</strong></p> <p>The IRS uses a computer program called the Unreported Income Discrimination Function System to compare each person&rsquo;s tax deductions and credits against what the IRS has determined is average for certain income brackets. If your DIF score is considerably different from that of others in your category &mdash; as in, you earn $60,000 a year but reported a $40,000 charitable deduction &mdash; that&rsquo;s a big IRS red flag, as CNNMoney.com staff writer Christian Zappone described in 2007. The program&rsquo;s main purpose is to scout out individuals who&rsquo;re most likely to owe more money after further analysis.</p> <p><strong>4. Earning Six Figures or More</strong></p> <p>Back in the day, a common complaint come tax season was that the rich were somewhat protected from audits. But these days, the IRS is more concerned with lowering the country&rsquo;s astounding tax gap (the difference between taxes owed and taxes paid). &ldquo;If you&rsquo;re a millionaire, you&rsquo;re a lot more likely to hear from the IRS than taxpayers in any other income bracket,&rdquo; IRS spokesman Terry Lemons told the <em>Wall Street Journal</em> in 2009.</p> <p><strong>5. Claiming Home Office and Job Expense Deductions</strong></p> <p>The problem with both of these deductions is that too many people claim them for inappropriate reasons. A home office isn&rsquo;t just a room that you happen to work in once in a while. And when it comes to job expenses, there&rsquo;d better be a good reason why your bosses didn&rsquo;t reimburse you in the first place, so it&rsquo;s an iffy deduction right off the bat. There are detailed rules for deductions, so unless you want a tax tangle in the future, don&rsquo;t claim anything unless you know it&rsquo;s right.</p> <p><strong>6. Making Enemies</strong></p> <p>The IRS&rsquo;s computer program triggers many audits, but some come courtesy of tipsters &mdash; including individuals, media sources, and public records &mdash; reporting potentially faulty tax returns. &ldquo;The Examination Process,&rdquo; an explanation of auditing on the IRS&rsquo;s Web site, lists &ldquo;information from compliance projects that indicates a return may have incorrect amounts&rdquo; as one of the reasons for extra examination.</p> <p><strong>One Potential Solution: Protecting Yourself with Paperwork</strong></p> <p>Luckily, there are steps you can take to protect yourself if you fall into one of these categories. The best means of self-defense is a thorough record that backs up your claims. Keep receipts, bank statements, and all pertinent paperwork that proves that what you put on your tax forms is true. The book <em><a href="http://www.amazon.com/gp/product/0471449725?ie=UTF8&amp;tag=divinecarcom-20&amp;linkCode=as2&amp;camp=1789&amp;creative=390957&amp;creativeASIN=0471449725">What the IRS Doesn&rsquo;t Want You to Know</a></em> details how long you should hold on to these records:</p> <ul> <li>Businesses should keep receipts and bills for purchases for four years, accounting books and bank statements for six, and tax returns for ten.<br /> &nbsp;</li> <li>For personal items, hang on to receipts and bills for four years, bank statements for six, and tax returns forever.</li> </ul> <p>The IRS has up to three years after you&rsquo;ve filed to audit, so keep that in mind when spring cleaning your office. It may feel silly to save a receipt from two years ago, but if it relates to a suspicious deduction you&rsquo;ve claimed, it&rsquo;ll come in handy if the IRS comes knocking.</p> <p>Information is power when it comes to protecting yourself from an audit. If you recognize that there are factors that set you apart from the average taxpayer, send in tax forms with an explanation of the situation, via either a note or paperwork that serves as evidence. However, there&rsquo;s such a thing as giving away too much information that the IRS didn&rsquo;t ask for, and that can slow down return processing. If you feel that your tax information could lead to an audit, take your return directly to a tax-preparation professional&rsquo;s office before you fill out any forms on your own. You may think dealing with a professional is too much of a hassle, but it&rsquo;s a far friendlier alternative than a stand-off with an IRS auditor.</p> <div class="field field-type-text field-field-guestpost-blurb"> <div class="field-label">Guest Post Blurb:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <p>This guest article is a contribution from <a href="http://twitter.com/VeniVitiVicki">Vicki Santillano</a> of <a href="http://www.divinecaroline.com/user/profile/67630">Divine Caroline</a>. Find more great articles from&nbsp;Vicki:</p> <ul> <li><a href="http://www.divinecaroline.com/22145/94341-danger-aisle-six--four-spendy">Danger in Aisle 6! 4 Spendy Spots in the Supermarket</a></li> <li><a href="http://www.divinecaroline.com/22275/95425-seven-ways-minimize-office-birthday">7 Ways to Minimize Office Birthday Awkwardness</a></li> <li><a href="http://www.divinecaroline.com/22189/91176-err-human--making-mistakes">To Err Is Human:&nbsp;Why Making Mistakes Is Good For You</a></li> </ul> </div> </div> </div> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/divine-caroline">Divine Caroline</a> of <a href="http://www.wisebread.com/worried-about-an-audit-six-irs-red-flags">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-your-chances-of-getting-audited-by-the-irs-your-guess-is-probably-wrong">What are your chances of getting audited by the IRS? Your guess is probably wrong</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/ring-ring-ka-ching-lying-about-your-telephone-tax">Ring. Ring. Ka-ching! Lying About Your Telephone Tax</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-survive-a-tax-audit">How to Survive a Tax Audit</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-to-deduct-charitable-donations-on-your-taxes">Here&#039;s How to Deduct Charitable Donations on Your Taxes</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes audit IRS Tue, 13 Apr 2010 22:29:20 +0000 Divine Caroline 18704 at http://www.wisebread.com What are your chances of getting audited by the IRS? Your guess is probably wrong http://www.wisebread.com/what-are-your-chances-of-getting-audited-by-the-irs-your-guess-is-probably-wrong <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/wisebread_imce/warcraft.jpg" alt="turbo tax war" title="turbo tax war" width="400" height="372" /> </p> <p>According to this <a href="http://video.msn.com/v/us/fv/money/fv.htm??g=0a730c1b-b4ab-4f5e-bdeb-141b9174a6c8&amp;t=&amp;f=15/64yourrealtaxrate40&amp;p=&amp;fg=">Kiplinger&#39;s tax tip video</a>, only <strong>1 in 150</strong> personal tax returns get audited. Realistically speaking, your odds of getting audited are probably even lower than that. In fact, it&#39;s virtually zero.</p> <p>The Kiplinger editor calls the taxpayer&#39;s fear of audits &quot;very stupid.&quot; He explains that you will not get audited as long as you don&#39;t claim any <a href="/20-amazing-outrageous-and-just-plain-weird-tax-deductions">insane tax deductions</a>. Therefore, everyone should be aggressive and take advantage of all the available deductions within reason.</p> <p><strong>Our irrational fear of audits</strong> </p> <p>One recent survey conducted by a CPA at Louisiana State University shows that the average taxpayer believes <strong>1 in 7</strong> people gets audited by the IRS. Over 80% of the people surveyed had unrealistically high expectations of getting audited.</p> <p>When the survey takes into consideration the likely income bracket of the participants, the results get even more ridiculous:</p> <blockquote><p>Taxpayers with the least revenue perceived their audit potential at greater than <strong>25 percent</strong>. [In reality, your chance of getting audited is 0.6%.] </p> <p>Conversely, taxpayers with the greatest revenue potential perceived less of an audit potential (15 percent). Source: <a href="http://www.google.com/url?sa=t&amp;ct=res&amp;cd=1&amp;url=http%3A%2F%2Fetd.lsu.edu%2Fdocs%2Favailable%2Fetd-11062004-130541%2Funrestricted%2FVanDenburgh_dis.pdf&amp;ei=XYUgRrLLMZXOgQOZurX_CA&amp;usg=__JSRIQz55vA1AqQL2YrNvEzi9MHk=&amp;sig2=h4pJg5_o66_4wOuqMc-L_g">Dissertation of William VanDenburgh 59</a> (PDF).</p> </blockquote> <p>In other words, people with the least money to report actually worry the most about getting caught.</p> <p><strong>Putting it in perspective</strong></p> <p>Instead of worrying about the IRS, you might think about these other <a href="http://www.nsc.org/lrs/statinfo/odds_dying.jpg">more pressing problems</a>: </p> <ul> <li>Chances of dying from heart disease: 1 in 5</li> </ul> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/wisebread_imce/cat_taxes.jpg" alt="cat and taxes" title="cat and taxes" width="240" height="180" align="right" /> <ul> <li>Chances of dying from cancer: 1 in 7</li> </ul> <ul> <li>Chances of dying from a stroke: 1 in 24</li> </ul> <ul> <li>Chances of dying from a vehicle accident: 1 in 84</li> </ul> <ul> <li>Chances of getting audited: 1 in 150</li> </ul> <p>So relax. Go out. Get some excercise. Stroke the kitty. Play some Warcraft. The taxman is not coming for you. But if you insist on getting in your taxes on time, here&#39;s a <a href="/15-to-35-off-turbo-tax-online">35% off TurboTax online deal</a> you can check out. </p> <p>Even if you <a href="/cant-afford-to-pay-the-irs">can&#39;t pay the IRS</a> it is not the end of the world. </p> <p><em>Photo by <a href="http://flickr.com/photos/travisjohnson/363831011/">Travis Johnson</a> and </em><em><a href="http://flickr.com/photos/justbecause/414669012/">Dizznbonn</a></em></p> <p>&nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/will-chen">Will Chen</a> of <a href="http://www.wisebread.com/what-are-your-chances-of-getting-audited-by-the-irs-your-guess-is-probably-wrong">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/ring-ring-ka-ching-lying-about-your-telephone-tax">Ring. Ring. Ka-ching! Lying About Your Telephone Tax</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird tax deductions</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/taxes-on-irregular-income">Taxes on irregular income</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-things-the-irs-doesnt-want-you-to-know-about-them">6 Things the IRS Doesn&#039;t Want You to Know About Them</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-can-you-do-if-you-cannot-afford-to-pay-your-taxes">What can you do if you cannot afford to pay your taxes</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes audit IRS taxes Sat, 14 Apr 2007 07:33:21 +0000 Will Chen 503 at http://www.wisebread.com Ring. Ring. Ka-ching! Lying About Your Telephone Tax http://www.wisebread.com/ring-ring-ka-ching-lying-about-your-telephone-tax <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/wisebread_imce/phone.jpg" alt=" " width="240" height="184" /></p> <p>I haven&#39;t had a landline in years. I&#39;m dead serious. Years. </p> <p>So, I was bummed to hear that this year, the &quot;sorry you were cheated initially when we taxed you too much&quot; refund that we get back is for <a href="http://www.irs.gov/newsroom/article/0,,id=161506,00.html">long distance telephone service</a>. </p> <p>Apparently, Americans who paid for long distance calling plans were cheated or something. By Ma Bell? Or the Baby Bells? Uncle Sam in conjunction with the Bell Family? It doesn&#39;t matter now. What matters is that, when you file your taxes this year, you can get back between $30 and $60, depending on the number of exemptions you claim.</p> <p>Whoop-tee-doo. Thanks, Uncle Sam. I&#39;ve been using only my pay-as-you-go cell phone for years, carefully tracking my usage, and this is how you repay my mobile monetary frugality?</p> <p>Now, it&#39;s true that some <a href="http://www.irs.gov/newsroom/article/0,,id=169091,00.html">cell phone plans do qualify for the tax refund</a> (thanks, <a href="http://www.cleverdude.com/articles/finances/cell-phones-qualify-for-telephone-excise-phone-tax-refund/">Clever Dude</a>). It just so happens that mine does not. I never paid this tax, and thus, I don&#39;t qualify.</p> <p>However, a friend of mine who works for H&amp;R Block told me that anyone can pretty much claim this refund. Because the <a href="http://www.irs.gov/newsroom/article/0,,id=164310,00.html">IRS isn&#39;t going to audit it</a>. Which is awesome, <strong><em>because I already filed my taxes</em></strong>, and I didn&#39;t claim it, because I was sure that somehow, THE IRS WOULD KNOW.</p> <p>It turns out that they don&#39;t really care. So, go ahead, claim it, even if you are an off-the-grid type who doesn&#39;t even HAVE a phone. Just don&#39;t get too greedy, or they might decide not to pay everyone their $60.</p> <p>Some of you may ask if I am advocating that people cheat on their taxes. And yes, I guess I am. Just a little. Most people qualify for this refund, but those who don&#39;t might as well go ahead and try to get it, too.</p> <p>I&#39;m putting the &quot;bread&quot; in Wise Bread. Not necessarily the &quot;wise&quot;, though.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/troy-hadley">Troy Hadley</a> of <a href="http://www.wisebread.com/ring-ring-ka-ching-lying-about-your-telephone-tax">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-7"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-billion-tax-refund-for-long-distance-phone">$10 billion tax refund for long distance phone</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-your-chances-of-getting-audited-by-the-irs-your-guess-is-probably-wrong">What are your chances of getting audited by the IRS? Your guess is probably wrong</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird tax deductions</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/taxes-on-irregular-income">Taxes on irregular income</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-things-the-irs-doesnt-want-you-to-know-about-them">6 Things the IRS Doesn&#039;t Want You to Know About Them</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes audit IRS long distance phone tax refund taxes Thu, 29 Mar 2007 00:07:19 +0000 Troy Hadley 411 at http://www.wisebread.com