With tax season in full swing, the IRS is top of mind for many Americans. While assessing your taxes and filing a return can be stressful, the government agency probably isn’t the scary villain you might have imagined. Here are five secrets about taxes and the IRS that can help guide your financial decisions and filing processes this tax season.
1) You Probably Won’t Get Audited:
In recent years, the IRS has faced some major budget cuts. Because of this, the government agency has reduced its personnel in all departments, including auditors. This reduction has played into a complementary reduction in audit rates.
In the event an audit occurs, it typically only happens to individuals who make over $200K per year. If you make under that amount, then your likelihood of getting audited is slashed even further. In recent years, less than 1 percent of taxpayers have been slapped with an audit, and this rate is expected to remain steady or drop even lower in coming years. Research indicates those making over $200,000 have only a 3 percent chance of being audited; those making more than $1 million annually have only a 6 percent chance of being audited. You should keep your filing records and organize your documents with a filing system even though it’s unlikely you’ll be audited; however, you don’t need to live in fear of the IRS breaking down your door and demanding answers.
2) The IRS Doesn’t Really Want to Seize Your Property:
If you have a large tax debt and you’re being hassled by a collection agent, you’ve likely been told that your home or other property could be on the line. In most cases, the IRS doesn’t want to seize your property—this is simply a threat designed to spur you into paying what you owe. While the IRS can and does seize bank accounts, taking hold of your property usually won’t give them the money they’re due—and it’s much more of a hassle. If you’ve been hit with a lien or levy notice, make sure you’re taking steps to begin paying off what you owe the government; they’ll be a lot more lenient when you do.
3) Filing Electronically Can Save You Money And Hassle:
Most of the issues that arise on your paper tax returns come from written error and transit mix-ups. Mailing in your tax payments means taking the chance that your check will disappear en route, which could delay and even prevent your refunds and returns. Instead of completing your return by paper, file electronically. This can ensure you get your refund quicker, help reduce your risk of mistakes and an audit in the long run, and prevent a great deal of hassle during the filing process.
4) The IRS Can Make Mistakes:
The IRS isn’t perfect, and their agents and software aren’t full-proof. If you get an audit notice, be sure to go through your supposed error to determine whether the government agency got it right. A few simple form letters and a bit of communication can help you close an audit quickly. In cases where you’re unsure how to rectify the mistake, rely on a certified tax resolution company. Professionals can help you spot any potential errors in a timely manner, and companies like Community Tax have a history of resolving tax debt issues.
5) The IRS Loses Millions to Fraud and Identity Theft:
According to the Government Accountability Office, the government agency paid out around $5.2 billion in fraudulent identity theft refunds during the 2013 tax filing season. On the flipside, many American taxpayers are duped by con artists who call pretending to be IRS agents. Hint to help you avoid this scam: The IRS will never call you. All notices are sent through mail, so don’t trust an “IRS call”, no matter how legitimate the person on the end of the line sounds.
This tax season, don’t let the complexities of our government’s tax practices get you down. With these secrets and tips in your arsenal, you can file your return with ease.