Tax audits are becoming more common by every year. You will come across one of your friend or relative who have received notice for audit from the IRS. They will prepare themselves for the audit and after going through will share some experiences with you. But be logical and try to find out what is true and what’s not. As a human being we tend to pretend we have gone through so much but still standing head up high. Same thing happens in case of the tax audit. They will tell you about the questions IRS agent asked and they way they answered but the whole conversation will leave you with some myths as well. Read on to know about most common myths related to the IRS and tax that can be found in the market.
Do you own a home business? You must have heard if you are running a home business, you’re more likely to pick up by the IRS systems because home office is red flag in the audit process. However, it is not true! These days it’s not a surprise to find office in home. So, you will not get a red flag, if you own home business. But it doesn’t mean that you can avail large amount of office tax deductions and tax relief. IRS takes the closer of the deductions you are availing being a home business owner.
According to some taxpayers, there is an “audit season” and you file your taxes in this period you’re more likely to get audit. However, there is no tax audit season and if you think by filing taxes late you would be able to stay away from the eyes of the IRS, get out of this impression as IRS uses high tech and highly advanced programs that will pick your every mistake in the filing in few seconds. No matter when you’re filing your taxes, if system shows your name, you will get notice of audit from the IRS. Another thing that with clear your myth of filing late is that IRS can audit you even after three years of your tax filing.
If you’ve hired a tax professional, tax audit will never happen! This is one more myth related to the IRS audit. However, employing a tax attorney is not a guarantee of getting away form tax audit. Tax attorneys are human beings and they can make errors as well moreover, if you’re not providing complete information about your finances to them, they will not be able to save you from the IRS. Do you think that audit will depend on the amount you’re earning in a year? If your answer is yes, again it is a myth. No matter what income group you belong to, you cannot live with a relief that audit notice will reach only to the tax payers belong to the high income group. IRS’ system are not concerned about how much you earn, if you’ve tried to save the money by wrong means, you’re more likely to receive the notice.