Millions of people file their tax return every year although they do not want to. They do not have a choice because they are obligated to do so. We can always opt not to file, but can we afford to deal with our government once we do it? If not then it is better to file our tax return rather than suffer the consequences. That good news though is that the Internal Revenue Service does not say anything nor questions our tax return once we file it. The bad news is The Internal Revenue Service performs a random review of all the tax returns. If any mistakes or discrepancies are found, or something is questionable, pray that you do not belong to that group.
What are your chances of getting audited by the IRS? As a self-employed individual earning your own money, there is a 50% chance that the Internal Revenue Service will take a look at your tax return. The IRS knows that as your profit increases so do your taxes and you become susceptible for an audit.
Although being audited is a random happening, the first thing to come to mind is that something is wrong on your tax return for the Internal Revenue Service to be at your door. Keep in mind if you earned over a $100,000 a year, you have to expect the possibility of an audit. Five out of seven self-employed taxpayers in the $100,000-a-year range will be asked to surrender financial records for examination by the Internal Revenue Service.
If the audit determines you must pay additional taxes, fines and penalties instead of receiving the refund you were expecting, you can choose to challenge the Internal Revenue Service findings. As long as you have proof you did not make any reporting errors, you can fight the outcome of the audit. The Internal Revenue Service is not always right when it comes to their computations and decisions.
Let your Accountant and tax attorney to do the things that they are best at when it comes to handling your taxes and dealing with the Internal Revenue Service. Do not be afraid to question the validity of the final audit of your business.