Will you be audited?: The IRS recently
released the Fiscal Year 2007 IRS Enforcement and Service
Tables as well as the FY 2007 Enforcement Revenue and
Individual Audits Chart. Interesting
reading, especially if you play fast and loose with the tax
code (otherwise known as "audit lottery"). Basically, audits
and enforcement are up…in some cases substantially over
prior years. I doubt that this trend will be reversed in the
near future. There is much less compliance to the tax code,
primarily because of the complexity of the law and the fact
that tax preparers are virtually unregulated at either the
state or federal levels. It's always been astounding to me
that you have to have a license to cut somebody's hair, or
install their plumbing, or even apply makeup…but not to
prepare a federal or state tax return. Amazing.
What do I do if I receive a notice from the IRS about
my taxes?
Don’t panic! the first thing to do is carefully read
the notice—to determine why it was sent, what the IRS
is requesting, and what they want you to do. It may be
nothing of importance; it may even be a notice in your favor.
After reading it you should bring it to our attention.
How do I find out about my refund?
The best way is to use the Check Your Refund link from the
Resources pages of our website! To look up the status of your
federal or state refund, you will need your social security
number, filing status, and exact amount you’re
expecting back.
Following is a list of the more common items you should bring if you have them.
§ Wage statements (Form W-2)
§ Pension, or retirement income (Forms 1099-R)
§ Dependents' Social Security numbers and dates of birth
§ Last year's tax return
§ Information on education expenses
§ Information on the sales of stocks and/or bonds
§ Self-employed business income and expenses
§ Lottery and/or gambling winnings and losses
§ State refund amount
§ Social Security and/or unemployment income
§ Income and expenses from rentals
§ Record of purchase or sale of real estate
§ Medical and dental expenses
§ Real estate and personal property taxes
§ Estimated taxes or foreign taxes paid
§ Cash and non-cash charitable donations
§ Mortgage or home equity loan interest paid (Form 1098)
§ Unreimbursed employment-related expenses
§ Job-related educational expenses
§ Child care expenses and provider information
And any other items that you think may be necessary for your taxes.
If you withdraw money from a 401(k) or an IRA before age 59
½, the distribution is taxable and there is a 10%
penalty on the taxable amount. The main exceptions
that let you withdraw money early without penalty are as
follows:
If you can afford to pay the amount you owe, it should be
paid. But many times that is not the case. If you cannot
afford to pay, you have several options. Ignoring the IRS
should not be one of them!
If you use a portion of your home for business purposes, you
may be able to take a home office deduction whether you are
self-employed or an employee. Expenses you may be able to
deduct for business use of your home may include the business
portion of real estate taxes, mortgage interest, rent,
utilities, insurance, depreciation, painting, and
repairs.
You can claim this deduction only if you use a part of your
home regularly and exclusively:
Generally, the amount you can deduct depends on the
percentage of your home that you used for business. Your
deduction will be limited if your gross income from your
business is less than your total business expenses.