Most people, when it comes to tax audit, tend to start getting frightened of mails that are coming from the Internal Revenue System. One thing that adds more to the predicament is a letter from Internal Revenue System that asks for a meeting. There are certain things that can help you come out of this mess such as inclusion of all the income in the tax return, furnishing IRS with the adequate documents and comprehending each and every aspect of tax law that can help you in letting your entire tax return go under vigil or to validate the various options for acquiring tax relief.
The very first step that you as a taxpayer have to follow is to report all the income on the various forms and on the various areas of a tax return form. You need to know before hand that W-2 income basically belongs to the “Form 1040”, the income from both the official and residential sources directly goes to the “Schedule E” and the non employee compensations are required to be shown on the “ Schedule C”.
After this you are required to acquire an appropriate copy of the 1099 or W-2 from the issuing agency before you file your tax incase your original copy has some inaccuracies. You are required to report all the income that is accredited to your SSN (Social Security Number). When you furnish this particular information Internal Revenue System will match the return information it has received with the original one that you have on the tax return. It is entirely your responsibility to dispense the reported income as yours to a legitimately authorized person by providing the 1099 and then sending the 1096 to the Internal Revenue System. If you have income and the interest joined in the savings, then this particular step is obligatory for you.
You have to make sure that on your tax return you include all the cash payments that you have acquired from your work or sales. This is important as if you do not report your appropriate income or even if you underreport your income, you will still receive mails from Internal Revenue System to provide complete documentations.
One more important thing that can avoid tax audit and can bring you closer to tax relief is declaring the hobby income on the Form 1040’s line twenty one. Never try to consider your hobby expenses as any type of business loss as this is not going to be of any help.
Some simple tips that can be of great help, include attaching photocopies of the documents that are going to authenticate the claim, always round off the deduction to the nearest dollar value and be careful that you do not miss any deduction and nor you consider anyone twice.
By doing this, you can definitely stay away from tax audit and draw yourself closer to tax relief and most importantly these steps are not that tough to follow also.