10 Things the IRS Won’t Tell You
Smart Money Magazine has provided us with a very interesting look into the back end of the Internal Revenue Service. A lot of people have a pretty negative view of the IRS and there are also those that maintain that the fact that we are taxed is unconstitutional. While this is a little far removed from the point of this article, its worth mentioning that the IRS is not out to get you but are simply following rules that are public knowledge. Granted, just because they are public knowledge doesn’t mean that they are simple or easy to follow. There is a slew of programs out there that abide by these rules and will hold your hand right through it. If you are ever unsure, do some research or ask a professional. As long as you learn something it will be worth it. Now to the long awaited list!
- Like or not, you may need help with your taxes. I know that Frank would say, hands down, that its completely doable yourself, there are some circumstances where you might need some help with some heavy lifting. Perhaps not for basic filings, Turbo Tax can do that, but if you have made a lot of changes to your portfolio or have a side business, it might be neccessary.
- You dont have to be rich to be audited. The audit holds a great deal for the tax payer and for good reason. An audit can be a nightmare and its one of the IRS’ largest weapons. What throws these flags? Claiming deductions that are higher than normal, and that definition of “normal” is an IRS trade secret. Another is big charitable donations: get a receipt and keep it for seven years. That’s how long the IRS can go with an audit.
- Fear is often out best weapon. Since audits are so daunting, people often over pay thinking that they will be seen as guilty until proven innocent. Be sure to take every legitimate, justifable deduction you can.
- The AMT is our ATM. AMT was devised in 1969 and was meant for large earners with lots of deductions to pay their fairshare. Instead of a small number of people, this will affect upto 87% of taxpayers by 2010. Find out more about AMT and see if you have been exempted for this year.
- Just because we billed you doesn’t mean you owe us money. There are times when you get a letter saying that you owe the IRS money, but its possible that it is a descrepancy. It is, however, your responsibility to prove the error of their ways. Something like 98% of the audits it sends out require clarification, not payment. Get some assistance from the NAEA.org.
- If you don’t pay, we’ll sic a collection agency on you. Wouldn’t you think that as a federal entity, the federal government would be able to collect their own debts? Maybe its a lack of resources, or they have some deal, but it happens. If you get turned over to a collection agency, you have the right to request that it be turned back over to the IRS. Why is this good? The IRS has the authority to compromise with possily a lighter settlement which is not what the private agencies are able to do.
- Want to go green? We’ll help you pay. Remember last year’s “porkulus bill?” Well there was a little piece of bacon in there that was meant for the environment (on top of all the other eco affairs). The Energy Policy Act of 2005 has been extended and you might be able to snag some benefits from it. Photovoltaic systems can get you back about 30% of your upfront costs. Check out solar-estimate.org (check it out its pretty cool: have an electric bill handy) to see what it might cost in your area. Wind can also be an option with up to $4,000 or 30% of the costs of that as well. If you aren’t quite that hardcore, you can get $500 for installing energy efficient windows, insulation or a central air system in your home.
- April 15th isn’t necessarily a hard deadline. Fill out IRS Form 4868 and get an extension for 6 months. You can even get this up to the orginal April 15th deadline. Watch out for large life changes as penalties and monies owed will still be due on time.
- We may be a federal agency, but that doesn’t mean your data’s safe with us. Unfortunately, the process that we go through for taxes make us susceptible to getting our identity stolen and its on the rise over the past few years. This is just a fact and the IRS doesn’t really have anything to say about it so be careful and watch your accounts.
- We may still have your refund. This is one of the largest things that we get mail about and the best we can say is to go HERE. Why does this happen though? Mostly, this is due to inaccuracies of mailing addresses. If you moved, check your forwarding mailing address and double check your direct deposit information.
As you can see there is a ton of information to be learned…if you have a tip to submit, try and include a link so that others can do the same research!
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The extension is good to know about. I am so busy with things right now, I don’t feel like I have time for taxes (that’s not true at all, but I love to procrastinate!)
Good list.