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Have your tax return ever been audited ? If so, why and what did you do about it.
My sister in law years and years ago was audited for cheating on her taxes. She claimed her pets as dependents... idiot....
Well, she was audited and had to pay it all back.
As a business owner, my tax filings are loophole mania. It should, at the least, raise flags... even though it's all legitimate and I can back it up. But I've never been contacted by the IRS in regards to an audit or incorrect amount due.
Yes -- we gave an old truck to a friend, and he then sold it. The IRS had a hard time believing we would give a truck away, and since it wasn't to a tax deductible place, we just signed it over to him, it caused us to be audited.
Accountant was frantic (we own a small business) but I kept asking him "Did you lie on our taxes? Cause I didn't". I knew we had nothing to worry about.
It was a real big audit, too, auditor went over every thing with a fine tooth comb. And the whole thing started badly, because the auditor CALLED my house and said -- and I'm quoting... Hello, my name is ____________ from the Internal Revenue Service. May I speak with Tallysmom?
And then said -- I have your tax return in front of me. To confirm you are Tallysmom, Can you please give me your Social Security number?
That's when I said Yeah, right. And hung up on him.
He called back -- and asked why I had hung up on him, and I said -- Look mister. I didn't fall off the pumpkin truck yesterday. There's no way in hell I am going to give some jagoff on the phone my social. That's just not going to happen.
And I hung up on him again.
Third phone call convinced me that MAYBE, this guy really was from the IRS, and I did a little more yelling -- never because I was getting audited.... just the way this guy went about trying to do it. I got his badge number and called my accountant, who called his friend the IRS agent and confirmed this guy was an IRS agent. BUT -- at that point I was to call him back, and tell him to call my accountant.
He found a few tings to our favor and a few things not to our favor and we had to pay 600 bucks. They said 900, but when we sent the 900 as soon as I got the bill, they refunded me nearly 300 for prompt payment.
And then sent me three reminders to pay the 900 over the next six months.
Yep, we got a mini-audit.
Our charitable contributions were a red flag to them.
We had to send in about two inches worth of paper documentation, which was very easy to do as I keep all relevant paperwork.
They reviewed the documentation, said all was in order, and that was it.
AT one time I was involved in rental property that was being remodeled. The listed expenses were questioned. Every canceled check was reviewed and if not properly processed was disallowed. I was able to provide documentation for almost all questioned items. No documentation no allowance.
I'm not sure what an audit is honestly, but we've had the IRS question our taxes twice. Both times it was super easy to clean up because it was just reporting negligence, not because we were purposefully trying to hide money. The first time we didn't need to pay, the second time we had to pay $4k.
It is unlikely I will ever be audited as I just take the standard deduction every year, so an audit would take about 15 minutes.
Surprisingly, my parents have never been audited, even though they have been self employed all their lives, have several businesses, and own many rental properties, and have multiple trusts. They are brutally honest on everything, so an audit wouldn't be a problem, outside of being a huge inconvenience.
One person in our office has been audited twice, though. Both times were triggered when she reported a HUGE increase in her income due to a monstrous payoff from an ex-husband (think high 6 to low 7 digits each time). Again, brutally honest, so she had no issues, just the inconvenience.
I think usually an audit is triggered just from unusual events, not necessarily from having a complicated life. As long as your complicated life is consistent, you are less likely to be audited.
my financial planner told me keep tax statements for up to 7 years just in case so i keep them since the 2005 tax year; the rest going back to the 90's i dumped
Back in the 1970's working as a truck mechanic's apprentice, the head maintenance guy for the place we worked for operated a business on the side. He came into the truck shop one day and asked me if I've ever been audited. I had not, but I could tell he was really, really worried and concerned that the IRS would find something false on his filing. I told him just to be honest, and produce his receipts and expenditures, and they'd go though them and let him know about his accounting mistakes.
He told me he had an appointment with a IRS agent that week.
Well, he was so busy working on stuff at the plant, I hadn't seen him, and I was beginning to think they threw him in prison for tax evasion.
Next week, he came into the truck shop with a box of donuts and was smiling ear to ear. I told him he looked like a cat that just caught and ate a canary. He told me that his IRS audit went great! I said, hey man, that's alright! How did you do it.
He took all of his receipts and dumped them into a large shoe box, and mixed them all up, on the advice from an attorney. When he went to the IRS office for the audit, the IRS agent asked him for copies of his paperwork, filings and receipts. He then place the box of receipts on the IRS agent's desk and said, here you go. The IRS agent looked, paused and then said, okay, we'll take your word for it.
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