All Americans need to be informed about the basics of tax and why they can be examined by the IRS, which happens each year. Here’s a guide to understanding tax examination and how to prepare for it;
What can make you a Target?
The IRS has a division of Global High Wealth Taxpayers since 2009. According to the IRS, high-income taxpayers are more likely to be examined compared to low income taxpayers. Citizens who earn up to $10 million per annum have a less chance of meeting the agency for examination.
On the other hand, certain sort of financial, personal and businesses may also be suspicious in the eyes of the IRS. These might include:
- Charitable Organizations
- Businesses that own (farms, horse breeding stables or racing animals, etc)
- Usage of private aircrafts
How can you be ready for an Examination?
If you understand the basics of the IRS examination cycle, you can thoroughly prepare yourself beforehand.
Knowing the situation well can help you focus on points regarding the reasons of your examination. If you do your research, you can have substantial information and knowledge regarding your case.
Your documents should be complete and accessible. If you own a private jet, the IRS can focus on that. However, you can raise a key question if you know that your jet is taxable or not. Small facts can help you seem prepared.
Contact a Professional
Overconfidence can be a disadvantage to you when you face the IRS. Contact Tax Help MD for the examination preparation so that you have adequate knowledge when you represent yourself.