[dropcap style=”font-size: 60px; color: #f25d5f;”]O[/dropcap]ut of the individual tax returns that were filed in 2014, approximately .85% of them were later audited. Finding that you may be audited by the IRS can be very frightening.
Therefore, it is always important to fully understand tax law to avoid this situation. There are a few things that you should keep in mind in order to determine if you may be at risk for an audit after you have filed your taxes.
One of the major risk factors would be filing returns with incorrect information ranging from inaccurate spellings to inversed social security numbers. Every mistake on a tax return is a serious mistake. Take the time to review all of your information before you submit your tax return. Doing so can help you avoid any complications later on. Always check your name, the spelling, as well as your social security number. You may be at a greater risk of being audited if your background information is incorrect.
Those individuals that have a business may be at risk for an audit if they have reported any losses during that year. Many individuals are unaware of the fact that the IRS will be a lot more interested in their business, and their revenue books, if they have reported a loss. This is because the government will want to make sure that each and every loss they have reported is legitimate.
While losses can be a trigger for the government to look at you closer, what you must understand is that this is not a given criteria for an audit. That means that you should take the time to look over the losses that you have reported and determine if they are reasonable and they are within the guidelines of tax law. If you have reported losses for transportation, food or even travel, and they are extremely high the government will become extremely concerned and they may begin looking at your business.
If you have a job that is mainly cash based, meaning you are paid with cash or you are earning tips, you have a great chance of being audited. That is why you need to fully understand tax law. This will help you report information to the government accurately and decrease the chances of being audited down the road.
What you have to understand is that being honest is always the best policy. Even if an individual lies on their taxes and does not get audited, this does not mean that they will have the same outcome the next time. Tax fraud is a crime and you will eventually be caught. Take the time to learn about the laws and file your taxes appropriately. If you are really struggling with the law then you should consider hiring a professional to help you. Doing so will greatly decrease the chances of being audited and it can certainly decrease any stress you may suffer from during tax season. Contact a tax audit attorney to learn more about how to cope with a pending audit.
One of the tax breaks New York offers which is called the NYS Low Income Housing Tax Credit Program a Brooklyn developer decided to take advantage of was a deal that allowed him to take advantage of a $300,000 tax break provided he made at least half of the apartments in the building he owned less than certain amount. The developer took advantage of the tax break, but failed to lower the rent charged for the apartments. In November 2014, the IRS was able to get justice when the developer formally agreed to pay a tax settlement of $500,000.
There was a time when the developer might have been able to get away with the scheme, but New York State’s Attorney General, Eric Schneiderman, is fed up with the landlords in the state reneging on their promise to provide affordable housing to the people who need it, but taking advantage of tax breaks.
Mayor de Blasio has agrees. The mayor has always been a supporter of affordable housing and is would like to be able to either make at least 200,000 homes available to people who need financial assistance in the next decade. The sheer number of landlords taking advantage of the program is a major problem. It’s estimated that as a result of failing to offer the type of housing needed to qualify for the tax break is costing New York a great deal.
De Blasio isn’t happy about the situation. “We need to get the most out of every dollar we spend, and it is vital that the people with whom we do business treat their workers fairly and deliver the affordable housing they promise.”
The Low Income Housing Tax Credit program has been used nationwide and as long as everyone uses the program correctly, not only does the program drastically reduce the nations homeless rate, it’s also good for the economy. According to the National Association of Home Builders the program has been used to generate approximately $7.1 billion each year while also helping support 95,000 jobs.
The Low Income Housing Tax Credit program is just one example of a program business owners can take advantage of in order to get a break on their taxes. Before signing up for one of these programs it’s always a good idea to consult with a tax settlement attorney who understand the finer nuances of the government’s program and will help you set things up so you can run a profitable business and not violate the terms set by the government.
The wonderful thing about having tax settlement attorney on your side right as you start your business is that they’ll help you get the most out of applicable government programs, help you work with the IRS if you’re business is audited, and defend you if the IRS ever claims that you owe back taxes.