Myths regarding the IRS run the gamut. From the anal-retentive auditor showing up on your porch to the dreaded “don’t ask, don’t tell” approach, it can get quite difficult differentiating the facts from fiction. Rather than getting lost in the delusions, take a moment to get your facts straight.
Fiction: All auditors are accountants by trade
Fact: A commonly held misconception is that all auditors are just accountants with a badge of authority. This is only a half-truth. While an accounting background is a very useful foundation for a career as an auditor, it’s not an absolute necessity. Internal auditors can work at the local, state, or federal level and deal with fraud risk and IRS compliance issues. According to a recent survey performed by the IIA’s Audit Executive Center, recruiters are finding that more and more applicants hold backgrounds in business, IT, and analytical focused fields.
Fiction: If the auditor doesn’t ask, don’t tell
One of the biggest mistakes Americans make is withholding information from Uncle Sam. Sooner or later, all your dirty laundry will be aired, so if you’re confronted by an auditor it’s best to be upfront and honest. Audits rarely occur in the time immediately following your tax submission. Based on IRS regulations, you can be audited up to three years after you submit your paperwork. For that reason, keep an organized file of all important documents and plan ahead for tax season.
Lawrence Levy, CEO of Levy and Associates says, “the reason tax season can strike fear in the hearts of filers is because they may not understand the process or correct steps to take to file correctly. Filing for taxes is much less daunting when the person understands all of the forms and deductions.”
Fiction: Automated tax programs are audit-proof
There’s less than a month left before Tax Day and as the 15th rapidly approaches, it seems as if tax software advertisements run on overtime. While there are a lot of efficient programs on the market, you need to be aware that they are not audit-proof. If you see the software churning out some result you suspect are wrong, don’t just hit the override button. Do a little extra research before submitting the final forms. If you’re still uncertain as to the accuracy of your information, consult a professional agency.
Fiction: IRS agents target certain deductions
You should never pass over a deduction just because you think it’ll trigger an audit. If you can legitimately claim a deduction, by all means go for it. Home office deductions and charitable contributions are the most highly touted “triggers” but that’s far from the truth. You should, however, be able to sufficiently defend your deduction in the event that it is called into question.
Recap
The foremost lesson in all this is to not believe all the hype you hear. It’s worth doing your own research when it comes to matters in the financial sector. To be safe, keep meticulous records of all your business dealings, don’t try to outsmart the government, and consult a professional tax expert if you’re unsure about any aspect.
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