What happens if a hobby becomes more than a hobby? Maybe a brewing hobby has led to a passion and some great brews that you want to branch out and pursue brewing as a full-time career. Maybe a farming hobby brought in more of a profit than you expected and you want to shift more resources into making it your life’s work. Or perhaps you have chosen to increase a pastime spent woodworking into your profession.
As tax filing season ends, taxpayers throughout the country begin to realize the reality of tax audits. Tax experts predict tax audits by state agencies to go up this year. The main reason: the new tax law.
The Internal Revenue Service (IRS) recently published a newsletter encouraging workers with more than one job to conduct a paycheck checkup. The checkup involves reviewing withholdings to ensure that the taxpayer is paying enough to cover tax obligations.
The Internal Revenue Service (IRS) can review taxpayers’ returns. But, like most things in the legal world, this ability is generally limited.
It may be tempting to attempt to reduce your tax burden by rounding some numbers up and rounding some numbers down when filing your tax returns. However, getting too loose with your numbers in your return can increase the risk of an audit. Common red flags that tend to increase the risk of an audit by the Internal Revenue Service (IRS) or local state agency include:
Taxpayers may be aware of some of the common triggers that lead to an audit by the Internal Revenue Service (IRS). These can include a large amount of wealth, having foreign assets and small business ownership.
The United States tax code is a complex beast. A failure to abide by the rules outlined in the code can result in serious consequences. Depending on the details of the allegations, the consequences for a failure to follow this code can range from relatively minor financial penalties to serious prison sentences.
If there are questions about your tax returns, the Internal Revenue Service (IRS) can generally look back three years — but there are some exceptions that allow the agency to look back even longer. Two of the most common reasons for an extended look-back period: omission of income and a failure to file returns.
The Internal Revenue Service (IRS) audited an estimated 1.1 million tax returns in 2017. Those who are concerned about an audit likely have the following questions:
Those who rent and use vacation property likely purchased the real estate with tax savings in mind. Although these tax savings may still be available, the passage of the Tax Cuts and Jobs Act (TCJA) has changed how taxes are applied to second properties.