Don't panic if the IRS gov sends you a letter
Let's pretend that you've just received a letter from the Internal Revenue Service.
Relax. Most letters from the IRS involve minor issues. It's possible that you made an arithmetic error on your return and the IRS actually owes you money. Alternatively, if the error was made in your favor, you might owe the IRS some money and interest. The current interest rate is 4% on an annualized basis. So if you owe $100 for one month, the interest is only 33 cents ($100 times 0.04, divided by 12). If you owed $1,000, the total interest would only be $3.30.
The biggest reason that people receive letters from the IRS is human error. Each year, more than 1 million letters are sent to people because they failed to sign their returns. Or maybe they made a mathematical error. Or even better: The IRS made the mistake. For example, in 1998, the IRS sent out apologies to 20,000 taxpayers for mistakes it made in handling their accounts.
Math errors rarely result in audits
Sometimes, the IRS errors are ridiculous. A few years ago, Kenneth Steen of Chattanooga, Tenn., expected a refund of $513. Instead, he received a letter from the IRS demanding payment of more than $300 million. An IRS official later confirmed that about 3,000 people around the nation got similar erroneous notices.
According to the General Accounting Office, about half of the 10 million notices the IRS issues each year are because the information is "incorrect, unresponsive or incomplete."
If it's a math mistake, these errors rarely lead to a full audit. Check the numbers. Sometimes, the IRS misreads one of your numbers or the number is keyed incorrectly into the IRS computer. If it's wrong, send a letter with a printout of your calculations.
Mismatched interest and dividend reporting is the No. 2 cause for a letter from the IRS. Payers of interest and dividends are required to report those payments both to you and to the IRS on a Form 1099. If the amounts reported don't match the amounts on your return, you will get another letter from the IRS.
There are lots of errors here. Sometimes, the IRS will enter the Form 1099 information into its computer and erroneously keystroke the income amount or the Social Security number of the recipient. If the income isn't yours, you should get a letter from the bank or other payer and forward that letter to the IRS. If the amount is incorrect, send a copy of the Form 1099 mailed to you by the payer.
Sometimes, you may get a letter saying the income isn't reported even when it really is. I have a client who got a letter from the IRS demanding additional taxes for nine items of income that allegedly were not reported. In fact, seven were correctly reported on Schedule B on the return and the other two were accounts in the names of my client's children. I sent a copy of the Schedule B, with the items numbered and circled, and the issue was resolved.
Never represent yourself
What if it's the big one, the tax audit? An audit is merely a process where the IRS asks you to substantiate the numbers on your tax return. For example, if you claimed a charitable deduction of $750, the IRS would want to see canceled checks and receipts totaling $750. If you show up with $800 in substantiation, you get a refund; if your substantiation is less than $750, you owe money.
Once you know what the IRS wants, call your tax professional. Never represent yourself at your own audit. You may know what to say, but you don't know what not to say. If the audit is simple -- to prove your charity and interest deductions, for example -- you can do it yourself by mailing in copies of your substantiation. Otherwise, for all in-person audits, I strongly suggest professional representation. In either case, if you have the records, you needn't worry.
Actually, if you are audited one year with a refund or no change, it decreases your odds of being audited in subsequent years. In fact, if you are audited on the same items two years in a row with no additional taxes due, the IRS manual specifically recommends that they not audit you on the same items for the third year.
Almost all of the letters received from the IRS are computer-generated. This means that if an input error was made, it's now your problem. But in almost all cases, a well-drafted letter with appropriate substantiation will win the day.
Know More About How To Efile Your Taxes For FREE
Last Year more than 53 million people have filed their Income Tax Return online, and the number is expected to be even higher this year. Online tax e-file just make sense, especially if you expect a refund. By doing your taxes online, you will be able to find out within a day or so whether they have received your return, and you will be able to get your return with direct deposit within days instead of weeks. On top of those advantages, E-file is much simpler to do. The computer program will lead you through the forms step-by-step, and they will do the math for you. The program will also save you the time you spent looking through the 1040 tax tables and will do the tax calculations for you, showing you the exact amount of your payment or refund. In fact, by using an online tax filing authority, you may discover deductions you could have missed doing the return on your own. You may be wondering how the online tax website will "get" your W2 forms. The answer is simple: all you have to do is to enter the exact information from your W2s and other tax forms into the program. Obviously, you should gather all of the tax documents you think you will need before you begin the process. Once you're ready to get started, you can count on getting your tax return done much faster. You may even have the option to leave the program before you finish and to go back to the same point at a later time. Everything in the process is geared to making it as easy as possible for you. When you're searching for an online vendor, be sure to compare prices and guarantees. Look at features. Some vendors are more sophisticated than others and offer you more options. You will be able to pay online, and you can select a direct deposit option so that you will have your refund within a few days. Labels: Learn More About hwo to Efile Taxes Free to IRS.
Efile Taxes Online, See How to Efile Tax Return Online.
Just a few years ago, you had to do your taxes by hand. Then came the option to download IRS tax forms, or you could go to a local tax preparer where they would fill in the forms online and print them out for you. Today, you can take advantage of efile tax options that generally take less time, are more accurate, and very reasonably priced. Some of the fun things you won't have to worry about include missing out on a deduction you could have taken because you weren't aware of it or forgot it or didn't know the latest changes in tax laws and regulations. This is because Efile programs walk you through the process using a series of questions designed to insure that you take advantage of every possible legal deduction. Another task you might miss is doing the math. Your online tax filing program will take care of that for you. If you love searching through the back of the 1040EZ tax tables for the amount of tax to pay, you'll be sorry you missed that, too. Basically, you should start gathering the information you will need to complete your tax return at the beginning of each year. If you keep careful records of such things as medical expenditures and other deductible items, you will be ready the following January to do your return. This said, you should have the documents you need on hand to use as soon as you find the online tax filing website you select. Then all you have to do is answer the questions using your tax documents. In many cases, the only math you will have to do is to add up your charitable contributions, your medical expenses, and any other categories of outlay that can be deducted. The program will ask for information from your W2s and will do the rest of the calculations for you. You will then have a choice of Efiling or printing a paper copy of your return. With Efile and the direct deposit option, you should have your refund in just a few days. Labels: See How to Free Efile Your Tax Return Online and Get Fastest Tax Refund
Choose IRS E Filing This Year.
If you've never used IRS E filing, you've been spending way too much time on your taxes, and, worse, you've been waiting way too long for your tax refund. I've been doing my taxes online for three years, and I love how it works and how little it costs. Frankly, I can't imagine ever going back to the "paper route" again. The process is actually very simple. It starts with you gathering your tax information for the preceding year. One way to make sure that you have everything you need at tax time is to begin organizing in January. For example, keep all of your medical receipts, charitable donations, and other deductible expenditures in separate boxes or envelopes. That way, you will be able to access them quickly when you need them. It's also a good idea to have a separate envelope for your W2 forms and any bank or mortgage interest forms you receive. Once you have all of your tax information in front of you (sorted, of course), all you have to do it sit at your computer and follow instructions. What might have taken days will likely take you just hours. First, you must find a good Free Tax Filing website. Look for a site that can handle both your federal and state tax forms if necessary. Compare rates, and look at accuracy and completeness guarantees. Let's look at some of the advantages to doing your taxes online. One thing that might surprise you is that you will be walked through the process with a series of questions designed to insure that your return will be complete and accurate. You will even find that the questions may point you to deductions that you weren't aware you could take. Once you've completed the questions, your return will be checked, and you will be asked whether you want to finish your online filing or would prefer a paper copy. At that point, you will be ready to pay for the service. If you E file and use direct deposit options, you should receive your refund in just a few days. Labels: Choose E-Filing online this year.
The E File Tax Option - Easy, Fast and Secure Way to File Taxes.
For decades, people who tried to do their own taxes really were doing it alone. That was before the tax E file option became available. Now, instead of sitting at a table or desk surrounded by piles of paper and trying to make sense of each line on a taxreturn, you can enjoy the luxury of answering a few simple questions on a computer screen. The questions are, in fact, designed to make the process as easy as possible. They are even geared to helping you get the largest refund available or to pay the least amount in taxes. Even better, they may help you to discover deductions you didn't know you could take. While the government is constantly trying to make their forms more user friendly, keeping up with the changes and understanding all the details may not be possible. I've been filing my taxes electronically for three years, and I've been very happy with both the process and the results. It just seems to make great sense to use a process that makes an onerous task so much easier and faster. On top of everything else, when you do your taxes online for the second time, the vendor will check your new return to see if it deviates significantly from the first one and will ask you questions designed to make sure you haven't made an error in your calculations or forgotten a vital piece of information. The end result is that you basically have a partner who will help you to have as good an experience as filing a tax return can be. You can usually get all of this for a very reasonable price, and, at some sites, you can even deduct the cost of your tax preperation from your expected refund. By the way, you will get your refund much faster than you can imagine. The IRS will confirm that they received your return, often within 24 hours, and your direct deposit or check will be on its way soon after. Labels: IRS E-File Option to file taxes online get rapid refund.
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