1. More audits. With the government needing the revenue, audits are simply on the rise. Your chances of getting audited rise if you have higher income, self-employed, or posted huge write-offs.

2. Don’t delay. Not acting within the period stated (30 days) will make the audit a final assessment giving you less chance to fight back.

3. Get an accountant. It might cost you a few hundred to a few thousand but at least you have someone who knows how the system works.

4. Less talk, less mistakes. Don’t provide any other information beyond what’s given. You might incriminate yourself.

5. Talk to the auditor’s supervisor. If you’re not satisfied with the auditor’s findings go one higher up and negotiate with his boss. They have more authority to make concessions.

Some people think that tax refunds are “free money” windfalls that can immediately be earmarked as disposable income. Thing is, you should have a good idea of what amount you’re entitled to and classify it as part of your regular income.

As such, you should be spending it carefully and wisely and not eye that new widescreen LCD with lust now that you have money to buy one.

Before spending your money on unnecessary things, be sure that you use it to solve your money issues first.

Pay your credit card balance. Whatever balance you may have in your credit card is bound to bite you back with interest. Repay as much as you can with your refund.

Pay your mortgage. Be happy if you still have a home and able to keep up with the mortgage. So why not get ahead of your payments and trim some off using your tax refund?

Boost your savings account. Why spend it anyway? Stash it in your savings account. Money saved.

With the government facing a deficit, the IRS is really looking to maximize the opportunity to collect internal revenue that offering rewards for those who’d be turning in tax cheats is still part of the IRS’ program. Now’s your time to get revenge on that tax evading boss or ex.

The informant program has been around for almost a century and a half. Snitches can get up to 15% of the amount underpaid up to $10 million. So if you know a multi-million tax cheat, fess up and be a millionaire.

This is why if you’re doing anything illegal, best let no one know about it. Not your best friend. Not your wife. And not even some random stranger you meet in some weird place. Sometimes these things would just come around and bit you in the butt. Best option still is not to do anything illegal at all.

If you want to rat someone out, the information is available on the IRS Web site, or call the IRS tip line at 1-800-829-0433.

Source: CNN

It’s February and April’s near. Are you readying your tax forms yet? Not everyone’s spending is the same so there might be a chance that you’re doing any one of these activities that can actually be considered tax breaks.

Hire someone while working nonprofit. If you hire a babysitter to take over your parental duties when working for someone else pro bono, then the money you spend on your babysitter can be tax deductible. How cool is that? But then again, it’d only work if you do have charity work. Seems pointless to spend on a babysitter and work pro bono just for a tax break.

Charge your “vacation” expense. Caveat: If you decide to take your family on your business trip, only your expenses will be counted as tax deductible. So even if you get a hotel suite for the family, you can only subtract the expense for a single room.

Deduct work-relocated moving expenses. Need to move out to another locale for that new job that you’ve just landed? Since your move will be work-related, you can possibly deduct your moving expenses from your tax filing.

Pamper yourself (on doctor’s orders). The whole zen and relaxation thing has been acknowledge by many doctors to aid your healing. Medical expenses are tax deductible so your monthly massages that help improve your circulation might just warrant a bit of discount in the taxes.

While these tax breaks are typically available, always check with a tax professional before filing your return on which you applied any of these.

Source: MSNBC

A survey by the IRS Oversight Board reveals that many Americans are cheating on their taxes “as much as possible.” And they probably can’t blame people, not with the economic crisis of 2009. Who would want to hand the government money that they can otherwise use for the daily expense, right?

The most common fraudulent tax activities include claiming personal expenses as business expenses and bloating charitable donations.

The government may have also induced a possible factor that could contribute to tax cheating – the amount of tax credits that the government has made available. A lot of people are trying to get themselves a slice of that pie even if they’re not fully qualified.

Still, a main reason why people get to cheat on their taxes is their failure to understand the intricacies of the tax code. So better take time to know these things.

Sometimes a clear conscience is enough incentive not to cheat. For those who have a more skewed moral compass, perhaps the threat of getting audited should make your think twice on fudging the numbers.

Source: CNN