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re: Which bank transactions must be reported to the Feds?
Posted on 1/8/13 at 11:31 am to OnTheBrink
Posted on 1/8/13 at 11:31 am to OnTheBrink
I've used TurboTax for about 18 years.
One of the features of TurboTax is you can see your IRS "profile" regarding the possibility of an audit after you complete your taxes each year. It gives you an estimate of your chances of being audited based on the income/expenses/personal information you entered for your return.
I would guess if you do that, based on what you've said, you would have a "low" risk of being audited or being "targeted."
It's straight to prison if not the firing squad.
Just kidding...
In my case they wanted an explanation of the income I showed on my return that they didn't have any information for such as a W-2 or 1099. It never got to the fines and penalties status so I can't really answer your question with any authority. Poodlebrain, who posts on this board, is a CPA and he can probably give you a very accurate answer.
However one year the La. State Department of Revenue lost my enclosed W-2's (before I started my own business and became self employed) and they wrote me a letter telling me I showed too much withholding on my state return and I owed them money for penalties and interest.
When I figured out they didn't include my state withholding from my W-2 I sent the "local" copy of the W-2 (which we don't have to use because we don't have a local income tax). I pointed out the "missing" withholding was on the W-2 and about 2 months later I got a letter from them saying "nevermind." I assume the IRS has some similar type procedures in place.
One of the features of TurboTax is you can see your IRS "profile" regarding the possibility of an audit after you complete your taxes each year. It gives you an estimate of your chances of being audited based on the income/expenses/personal information you entered for your return.
I would guess if you do that, based on what you've said, you would have a "low" risk of being audited or being "targeted."
quote:
If I was somehow in the wrong, do they give you a chance to pay the difference? Or is it straight to prison?
It's straight to prison if not the firing squad.
Just kidding...
In my case they wanted an explanation of the income I showed on my return that they didn't have any information for such as a W-2 or 1099. It never got to the fines and penalties status so I can't really answer your question with any authority. Poodlebrain, who posts on this board, is a CPA and he can probably give you a very accurate answer.
However one year the La. State Department of Revenue lost my enclosed W-2's (before I started my own business and became self employed) and they wrote me a letter telling me I showed too much withholding on my state return and I owed them money for penalties and interest.
When I figured out they didn't include my state withholding from my W-2 I sent the "local" copy of the W-2 (which we don't have to use because we don't have a local income tax). I pointed out the "missing" withholding was on the W-2 and about 2 months later I got a letter from them saying "nevermind." I assume the IRS has some similar type procedures in place.
2
Posted on 1/8/13 at 11:38 am to LSURussian
Russian, as always, thanks for the detailed response!
We have always been very low. Even with that, I use some of our return to purchase the audit assistance they offer.
Yeah, I figured I would have a chance to make up the difference/prove why I did what I did, but I never know. And the thought of my 6'0, 180 lb arse in prison does not sound entertaining!
And FWIW, we always do what we feel is right, never try to take advantage of anything, just be by the book. I did not want my questions in this thread to come across as us trying to game the system.
quote:
One of the features of TurboTax is you can see your IRS "profile"
We have always been very low. Even with that, I use some of our return to purchase the audit assistance they offer.
quote:
Just kidding...
Yeah, I figured I would have a chance to make up the difference/prove why I did what I did, but I never know. And the thought of my 6'0, 180 lb arse in prison does not sound entertaining!
And FWIW, we always do what we feel is right, never try to take advantage of anything, just be by the book. I did not want my questions in this thread to come across as us trying to game the system.
Posted on 1/8/13 at 11:48 am to LSURussian
quote:What's your strategy on business deductions? Balls to the wall?
(before I started my own business and became self employed)
And what % of business expenses to income (1099 & self-employment incomes) do you think raises a red flag? 20%? 30%?
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