November 17, 2022
Presented by Heather C. Liston, CFP®, EA
1. Common triggers for tax problems with the IRS include:
-Math errors and typos
-Starting a new business
-Retirement plan problems
-Employment taxes
-Basis misunderstandings
-Under-reporting
-Other people’s problems (spouses, former spouses, business partners)
2. If you receive a letter from the IRS about a problem, read it and follow instructions.
3. Under-reporting income is a much bigger issue than underpaying when it comes to taxes.
4. Keeping good records is an essential part of operating a real estate business of any size.
5. Know the rules in terms of what you are allowed to contribute to a retirement plan. Over contributions can lead to tax trouble.
6. Over 1 million taxpayers are audited every year (0.5 percent).
7. Audit rates are higher for business owners, and even higher for those who make more than $100,000 annually.
8. The IRS actively scrutinizes large rental real estate losses, especially those written off by taxpayers claiming to be real estate pros who also have W-2 or other non-real estate schedule C’s. (Kiplinger, Jan. 12, 2021)
9. Best ways to avoid problems: know what information the IRS already has, check your math and keep good records.
10. There is no statutes of limitations for tax fraud or failure to file returns.