If you have been audited by the IRS, it’s important to get in touch with a tax lawyer Jacksonville, FL. Getting audited can be nerve-wracking, and an experienced lawyer from Crepeau Mourges may help you handle the matter. Here are a few common reasons why the IRS may audit you.
Table Of Contents
- Underreporting Income
- Why You Should File Your Taxes Early
- Why You Should File Your Taxes Early Infographic
- Tax Filing Tips
- Jacksonville Tax Law Statistics
- Common Myths About Taxes
Some people may try to leave out some of their income on their taxes. However, this can trigger an audit. At the beginning of the year, you will receive the proper W-2 and 1099 forms, which states your income from the previous year. The IRS also gets this information. Therefore, if you don’t list some of your income, they may find out about it and audit you.
Making Math Errors
The smallest math error on your taxes can trigger an audit. For instance, if you forget to include one zero on your income, the IRS may audit you. Even if it is an honest mistake, you may still face fines. As such, you should double check your numbers on your taxes before submitting them to the IRS.
Whether it is donations to a charity or business expenses, your deductions should be accurate. If you overstate your deductions, the IRS may find out and audit you. For instance, if you claimed you made a big donation to a charity, but it is out of proportion to your income, it could be a big red flag. That is why your Jacksonville tax lawyer may advise you to keep receipts for everything.
Claiming Non-Existent Dependents
Some people claim non-existent children to try to minimize their taxes. Others may make an honest mistake, like divorced parents claiming dependent children on both returns even though they do not file jointly anymore.
Earning A lot of Money
Although there is nothing wrong with making a high income, it can increase your risk of getting audited by the IRS. They are more likely to audit those with incomes of at least $1 million.
You Reported Business Losses
It is not abnormal for businesses to have more expenses than income when they are first starting out. However, if your business fails to make a profit year after year, the IRS may take notice and audit you.
If you have additional questions about audits, you may want to schedule a meeting with a Jacksonville tax lawyer from Crepeau Mourges soon.
Why You Should File Your Taxes Early
If you have waited until the very last minute to file your taxes, you are definitely not alone. Many Americans put off filing their taxes year after year. While doing your taxes might not be the most exciting task, filing them early comes with benefits.
Here are a few reasons to file your taxes early.
- Obtain important financial information. If you are making a big life change soon, it pays to get your taxes done early. For instance, if you are buying a house, you may have to show a completed tax form to prove how much money you earn each year. By completing your taxes early, you will be able to show your returns to the mortgage lender.
- Receive a faster tax refund. Who doesn’t want to receive their refund faster? The sooner you file your tax return, the sooner you will receive your refund. Whether you plan to use that money to pay bills or make a fun purchase, it will be exciting to receive it early. Also rather than filing a paper tax return, file electronically, as you will receive your return in your bank account much faster.
- Have more time to pay taxes. If you owe taxes to the IRS, you have another good reason to complete your tax return early. If you file your return in January, for example, you will have a few months to pay the taxes you owe.
- Have more time to find documents. From Social Security documents to expense receipts, you may need multiple documents to file your tax returns. If you do not include the required documents, the IRS may reject your return. This is another good reason to file your taxes early. You will have more time to retrieve these documents.
- Prevent tax fraud. Unfortunately, identity thieves have been known to go after people’s tax returns. If they obtain your Social Security number, they can file a tax return in your name and keep the refund. If you file your taxes early, you can reduce the risk of this happening. After you file taxes in your name, the IRS will reject additional returns.
- Reduce stress. Waiting until the last minute to file your taxes can make you feel stressed. If you file your taxes early, you can avoid unnecessary stress and rest easier at night.
Why You Should File Your Taxes Early Infographic
Tax Filing Tips
If you or a loved one needs assistance filing taxes, contact a tax lawyer Jacksonville, FL clients trust to answer any and all tax-related questions. Although many people choose to wait until the last minute to file their taxes, it may potentially have harmful consequences. That is why lawyers specializing in tax law recommend filing taxes early. The following are a few reasons why filing taxes may be in the best interest of every client.
Be proactive to reduce stress.
A large motivator for finishing taxes early is the emotional stress it takes off the client’s shoulders. Attorneys have seen many individuals wait until the last minute, procrastinating in filing their taxes. This undoubtedly puts insurmountable stress upon the person as they feel the deadline drawing closer. Instead of adding this stress to what is already a stressful season and time of life is unwise. For this reason, tax lawyers suggest filing taxes early to avoid this unnecessary stress. Financial stress and deadline anxiety affect a person physically, mentally, and emotionally as well. Clients should not have to face this burden alone but should allow a tax lawyer to assist, providing them with assurance and expertise.
Gathering documentation & timing considerations.
Anyone who has filed taxes understands how lengthy the process can be. There are quite a few documents needed to be able to finish and file taxes. The process of gathering all of that important information needed may take individuals some time, which is another benefit to starting early. If a person knows that it may take him or her significant time to locate all the information needed for filing taxes, they should begin the process as soon as possible.
Filing deadlines & incentives.
An incentive for filing taxes early is receiving tax refunds sooner. Many people know exactly how they will spend their tax refunds, whether that is paying a bill, taking a family vacation, or finishing a house project, the allocated money received in a tax refund is valuable. If individuals wish to access that money sooner, they will need to file their taxes early. On the other hand, if an individual is aware that they have to pay a large amount in taxes, filing them early gives them a longer deadline for paying.
Proof of taxes is essential for many large purchases.
Proof of taxes is needed for large life changes such as buying a house. If you know that you are buying a house in the near future, it would be advantageous to file your taxes early. Many banks require information that can only be found within your filed taxes. In order to stay on schedule, and avoid delays individuals should prepare their taxes early enough to ensure they have all the proper documentation needed for their bank. Clients needing help in this area should seek to consult a tax lawyer. An experienced attorney such as a Jacksonville tax lawyer helps their clients prepare for these major life changes and large purchases.
Jacksonville Tax Law Statistics
In fiscal year 2022, the IRS audited 626,204 tax returns. This represents a 5.7% decrease from the number of audits conducted in fiscal year 2021. The IRS audits a higher percentage of high-income taxpayers than low-income taxpayers. In fiscal year 2022, the IRS audited 1.2% of tax returns with incomes of $1 million or more, compared to 0.3% of tax returns with incomes of $50,000 to $100,000.
Common Myths About Taxes
A Jacksonville, FL tax lawyer can confirm that there are many misunderstandings about filing taxes. If you believe certain untruths about taxes, you may file incorrectly and even be at risk of an audit. You definitely do not want to deal with that kind of stress. Here are some common tax myths that you shouldn’t believe.
- Restaurant tips aren’t taxable income. Many restaurant workers, including servers and bartenders, receive tips. Some of the workers do not think that they have to claim these tips on their taxes. They may think that if they are given cash directly, they can just pocket the money and not pay taxes on it. However, if you receive tips while working at a restaurant, the IRS requires you to report your tips.
- It is simple to write off gambling losses. It can definitely be disheartening to lose a lot of money gambling. However, that does not mean that you can write off all your losses when you do your taxes. In fact, you are only allowed to claim deductions if your losses are equal to less than your winnings.
- Filing your taxes online will trigger an audit. While this may have been true many years ago, it is not the case today. Tax e-filing software has come a long way in recent years. When you file your taxes online, the software will identify errors and require you to fix them before moving on.
- You can claim pets as dependents. This is another common myth that a Jacksonville tax lawyer years. Although you might love your pets like family, you are not allowed to claim them as dependents on your taxes. However, people still try to claim their furry family members as dependents every year during tax season. If you try to claim your pets as dependents, the IRS may audit you.
- If you do not make much money, you will not get audited. It is true that wealthier individuals are more likely to get audited than those with modest incomes. However, that does not mean it is not possible to get audited. Even if you do not make a lot of money, the IRS may still audit you if there are red flags.
- You don’t have to file taxes on money you make online. This could not be farther from the truth. While it is great that you might earn a side income from selling a product or services online, you still have to pay taxes on it.
- Filing taxes takes too much time. Many people lead busy lives, but that does not excuse anyone from skipping out on their taxes. Filing taxes might not be the most exciting task, but it is a necessary one. If you are truly too busy to file your own taxes, you can always leave it up to a Jacksonville tax lawyer. He or she can complete your taxes in a timely manner, reducing your stress.
Don’t miss out on an opportunity by not having your taxes filed early. Instead, contact a Jacksonville tax lawyer today to ensure you are well-prepared for tax season and beyond.