Here’s our list of the top 4 things that taxpayers are unreasonably fearful of and shouldn’t be:
- Claiming on too many tax deductions. Claim them if you deserve them, and keep more money in your pocket. You’re entitled to take tax deductions. If a tax deduction is legitimate and you have the documentation to prove it, take it.
- Tax Audits. In fact, less than 2% of individual returns are tax audited. In most instances, if an adjustment is necessary, you’ll be notified by IRS and asked to provide documentation (usually by mail, called a correspondence audit). If an actual tax audit is necessary, you’ll have plenty of notice and if you have to appear, you don’t even have to be there (your tax attorney or other tax professional can often go in your place so long as he or she is authorized to talk to the IRS on your behalf).
- Not filling due to the lack of money to pay your tax bill. If you can’t pay the full amount ultimately, a payment plan can be worked out with the IRS. There are still other options such as an Offer in Compromise which would permit you to pay your bill in part. Disregarding your tax bill should never be an option – the IRS can and will garnish your wages, levy your bank accounts or take other actions; which can lead to more serious financial problems.
- Mail from the IRS. When you get correspondence from the IRS, don’t disregard it: take a deep breath and open the envelope. It’s hardly as bad as you think. Sometimes it’s an informational letter (advising you that you might need to file a certain form. What’s really important to remember is that most IRS correspondence is time sensitive – there are deadlines.