If you are hiding income from the taxman--or just worried
you might not be able to substantiate every deduction--are you at risk for
three years, six years, or more? Taxes are horribly complex, and even innocent
activities can be misinterpreted. That's one of many reasons it pays to know
how far back you can be audited. Start with the old rule that the IRS usually
has three years after you file to audit you.
But there are many exceptions that give the IRS six years or
longer. Several of those exceptions are so prevalent today that the six year
statute of limitations is becoming more common. The three years is doubled to
six if you omitted more than 25% of your income. For years, there was a debate
over what it means to omit income from your return. Taxpayers and some courts
said "omit" means leave off, as in don't report. But the IRS said it
was much broader, including reporting that has the effect of an omission of
income.
Today's small-business forecast is for bright skies, but
ominous clouds are massing, according to the Kauffman Foundation's annual State
of Entrepreneurship report, released Thursday morning.
The IRS has announced that it will no longer require
taxpayers to fill out the Obamacare line 61 on tax forms that asks whether
taxpayers had health insurance throughout the year, and penalizes them if they
did not. The line was added to enforce the individual mandate.
Except for tax protesters, no one wants to fight with the
IRS. But exactly how do you avoid it? Its a big worry, especially when the IRS
can audit 6 tax years not 3. You can file timely tax returns and pay your taxes
on time, but there's always the risk of an audit. There are numerous theories
for what-triggers-an-audit. Even so, there are some basic things you can do to
reduce your chances of being selected, and to make any interactions with the
IRS less traumatic.
The deadline is Jan. 31 for mailing Forms 1099 to taxpayers,
but the payer generally has until the end of February to send all its Forms
1099 to the IRS. This year (2017, for 2016 payments), the IRS moved up the
filing date for Forms 1099-MISC reporting non-employee compensation in box 7.
The reporting date to the IRS for those forms is January 31, the same as the
due date for forms to be issued to recipients. If there is an error on a Form
1099 tell the payer immediately.
During the early parts of the tax season, early filers are
anxious to get details about their tax refunds. And in some social media, this
can lead to misunderstandings and speculation about refunds. The IRS offers
some tips to keep in mind. Read more http://www.cpapracticeadvisor.com/news/12300993/the-top-income-tax-refund-myths
