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Last Minute Tax Tips

This year’s tax deadline is fast approaching, TaxAudit, www.taxaudit.com, the leading audit defense firm and the exclusive audit defense service provider for TurboTax, has compiled a list of last minute tips to get your taxes complete and hopefully avoid an audit.

1. Report all of your income. Report the amounts from all of the tax statements you receive such as 1099s, 1098s, W-2s, etc. The IRS is expecting to see these amounts match up to the amounts reported to them by third parties. A mismatch in what they see and what you report will likely result in a computer-generated notice.

2. Proofread every item on your tax return. Data entry errors are one of the most common causes of audits and notices. An unusually large tax refund might actually be an extra digit in the amount you entered for your W-2 withholding. And, similarly, a large amount owed could also be caused by one digit!

3. Compare last year’s return with this year’s return. If your situation was similar to last year but the bottom line of your tax return is drastically different, take a few minutes to go through last year’s return, comparing it line by line to this year’s. This will help you identify any errors.

4. Ask yourself: Is it really a business according to the Internal Revenue Code? If you have a business with little or no income for which you have been reporting a loss year after year, review the IRS’s guidelines for determining if an activity is a business or a hobby. Maybe it’s time to stop reporting that hobby as a business.

5. If you are separated or divorced and share custody of your children, communicate with your ex-spouse about who is legally entitled to claim the kids this year. Whenever possible, it’s best to avoid putting the IRS in the middle of your dispute with your ex-spouse. If you do, they will use the tie-breaker rules to determine which parent is eligible to claim the child and not what is “fair.”

6. Verify e-filing. Follow up on your e-filing and make sure your tax return was accepted by the IRS and state. It’s no fun to find out a year or two later that your return was never received and that you owe failure-to-file penalties.

7. Facts versus guesses. You may be in a hurry to receive your refund, but take the time to check your records to list the exact amounts used for income, expenses and deductions as opposed to using a “ballpark guess.” The IRS might feel your numbers are estimations or “guesses” if all the numbers end in three zeros.

8. Fact versus fiction. Just because your neighbor, coworker or even the butcher tells you they deduct “everything,” don’t believe it! Do your research, look it up and remember, most tax software programs have links or additional information to explain the requirements to deduct certain items. The IRS does not look favorably upon a taxpayer who uses the excuse, “But my butcher said I could!”


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