Wednesday, May 12, 2010

5 Things to Know About Getting Audited

Getting audited is not fun for anyone, but being aware of new trends can help taxpayers avoid a potential audit. CNNMoney.com recently put together a helpful list of five things you know about getting audited, check out a section of their article below or find the full text here.

1. Audits are on the rise

Now that your 1040 is out the door, you may be second-guessing yourself: Will the IRS come a-calling?

Well, the number of audits has risen every year over the past 10. And experts expect that trend to continue, what with the ballooning federal deficit and the additional $400 million earmarked for tax enforcement in 2010.

Even so, your audit risk in any one year is slim -- about 1% if your income is under $200,000, 2% from there to $1 million, and 6% for the ├╝ber-rich, based on 2009 data. Those selected tend to be self-employed or have unusually large write-offs, says Trudy Moore, an enrolled agent in Stevensville, Montana. If you do get hit this year, it's likely to be for 2008 taxes: Audit letters typically go out 18 months after the filing date.

2. Delaying can cost you the right to fight

If you are one of the unlucky few to get the dreaded letter from the IRS, be sure to take the action required within the time frame allotted, usually 30 days. Otherwise the dispute becomes a final assessment and moves on to the collections department, with no grace period.

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