All investors seek to take advantage of all legal means to legitimately reduce their overall tax liability, but abusive tax shelters are illegal investments claiming to reduce your income tax liability without changing the value of your income or assets.
While you cannot fully control whether the IRS audits you come tax season, there are measures you can take in an effort to lower your chances of being audited. It all starts with hiring a reputable tax accountant. If you prefer to file your own taxes, make sure you are diligent and extra careful. But what does this mean? Basically, you should avoid making the following common mistakes that tend to result in an audit from the IRS.
An IRS audit reviews and examines an organization's or individual's accounts and financial information to ensure it's reported correctly according to tax laws and to verify the reported amount of tax is correct.
You may be surprised to learn that not every audit notification you receive will be legitimate. So, first, make sure you received an official audit notification. The Internal Revenue Service (IRS) will notify you either by letter or by a phone call followed by a letter. The IRS does notnotify taxpayers about audits through email, so if you do get an email saying you've been selected for an audit, it's probably fraudulent. If you've determined that you're definitely getting audited, your next step is to learn what's involved.
The IRS will assure you that you've been randomly selected for closer examination. You may feel totally unhinged, like you are entering Dante's Inferno. For one Manhattan man, the letter about the audit was the opening act of a five-month-long drama.
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