When you go to your mailbox and find you have received an IRS letter or notice, you may be stricken with panic and fear. However, the IRS sends out millions of letters and notices to taxpayers annually due to various reasons and situations. While it’s possible you could be facing a serious financial situation, most letters and notices can be handled without you ever having to visit an IRS office in person. Should you receive an IRS notification letter, here’s what you need to know.
No one wants to go through an IRS audit. These days, an audit happens when the IRS thinks that the tax money they could recoup from an audit exceeds the cost of performing the audit itself, or if they believe there may be criminal activity involved. As long as you’re doing everything right, there’s no specific reason to worry about an audit. However, sometimes even if you think you’re doing everything right, you may accidentally raise some red flags. Following are seven things that could inadvertently trigger an IRS audit.
In these days of the gig economy, more business owners are leveraging the affordability and convenience of hiring freelancers (independent contractors) instead of regular employees. It makes sense. There are some tremendous benefits to hiring independent contractors (ICs), including not having to pay for insurance and payroll taxes. Another huge benefit to hiring ICs is that business owners can’t always predict busy times and downtimes. When seasonal shifts in business necessitate extra help, the business owner can bring on more staff without making any long-term commitments. As business slows down, the owner can simply let the ICs know their help isn’t needed anymore at this time. It seems like a dream come true from an employer standpoint.
There are few experiences that conjure such dread and stress as when a taxpayer has received notification from the Internal Revenue Service that he or she will undergo an audit of their tax returns.
(Pursuant To IR-2018-66, March 21, 2018) Internal Revenue Service
Every year the IRS issues its “Dirty Dozen” report to highlight the biggest scams that the public needs to avoid.