Finance: How To Audit-Proof Your Tax Return Forever!

How To Audit-Proof Your Tax Return Forever!

Written by Wayne M. Davies

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content and include my resource box as listed above.

If you do use repparttar 112702 material, please send me an email so I can take a look: mailto:Wayne@YouSaveOnTaxes.com

============================================================ How To Audit-Proof Your Tax Return Forever! (My Recent Close Encounter Of The IRS-Kind)

-- by Wayne M. Davies

Congress recently passed legislation that is supposed to result in a more "sensitive" Internal Revenue Service. You know, not such a lean, mean, tax-collecting machine. I DON'T THINK SO! Here's why.

A few months ago, one of my clients (let's call him Mr. Jones) got one of those IRS "love letters" requesting more information about his return, and repparttar 112703 IRS wanted to meet with Mr. Jones in person to discuss repparttar 112704 situation (not a good sign!) Mr. Jones (a local small business owner) was required to show up at repparttar 112705 local IRS office with all his records. The IRS was questioning repparttar 112706 legitimacy of several business deductions -- and so repparttar 112707 IRS was doing what it is allowed by law to do -- demand that repparttar 112708 taxpayer prove that those deductions were valid.

[By repparttar 112709 way, most IRS audits are done these days by mail. Humans are rarely involved in these so-called "correspondence audits."

Those big IRS computers can check and cross-check all kinds of information that should be reported on your tax return. And if something doesn't show up on repparttar 112710 return that is easily tracked by repparttar 112711 IRS computers, then repparttar 112712 computer just spits out a not-so-friendly "discrepancy notice", which you can respond to via mail.]

Turns out that Mr. Jones lost repparttar 112713 audit and ended up owing repparttar 112714 IRS a significant amount of money -- repparttar 112715 additional tax, plus penalty and interest for late payment of that tax. Why did Mr. Jones' lose repparttar 112716 audit? Mr. Jones made two "classic" taxpayer mistakes:

MISTAKE #1: "NO RECEIPT, NO DEDUCTION"

Mr. Jones lost several deductions simply because he didn't have repparttar 112717 proper documentation to prove repparttar 112718 deductions.

What do I mean by "documentation"?

Well, if repparttar 112719 IRS requires you to substantiate a deduction on your tax return, you must be able to provide written proof that repparttar 112720 deduction really happened. The easiest way to prove a deduction is to hang on to:

a) The receipt or invoice, and

b) Proof of payment, which can be a canceled check, cash receipt, or credit card statement.

Mr. Jones reported numerous deductions for which he simply didn't have repparttar 112721 documentation. No receipts, no canceled checks, no nothing. Turns out that Mr. Jones was one of those "cash guys". Do you know what I mean by a "cash guy"? Maybe you know what kind of guy I'm talking about -- He never wrote a check in his life, just carried a wad of cash around in his pocket. He paid for everything with cash, and never kept any of his receipts.

The 37 Cent Mistake

content and include my resource box as listed above.

If you do use repparttar 112701 material, please send me an email so I can take a look: mailto:Wayne@YouSaveOnTaxes.com

=========================================================== The 37 Cent Mistake

-- by Wayne M. Davies

When it comes to filing your tax return, spending 37 cents could be repparttar 112702 biggest mistake you ever make.

Millions of taxpayers make repparttar 112703 mistake of putting their income tax return in a regular letter-sized envelope, sticking on a 37 cent stamp, and placing repparttar 112704 envelope in their mailbox.

And millions of taxpayers "get away" with this mistake year after year.

Why do I say that putting your tax return in repparttar 112705 mailbox is a mistake?

Let me explain.

Every year, a small percentage of mail doesn't get delivered. The U.S. Postal Service doesn't like to admit this, but it's true.

Furthermore, even if your tax return gets delivered to repparttar 112706 IRS, every year a small percentage of tax returns get lost by repparttar 112707 IRS.

Don't believe me? I'll never forget repparttar 112708 day one of my clients showed me a letter he received from repparttar 112709 IRS:

"We regret to inform you that we received your return.... but have lost it."

Honest to goodness, this actually happened!

So my question to you is this: What are you doing to do if this happens to you!

If your tax return doesn't get delivered, or if it gets delivered but is subsequently lost inside repparttar 112710 mammoth IRS, what are you going to do to prove that you actually mailed repparttar 112711 return?

Just calling repparttar 112712 IRS and saying, "Well, I mailed it on time. I know I did!" isn't going to prove anything. And repparttar 112713 burden to prove you mailed repparttar 112714 return on time will rest on your shoulders.

You have two ways to solve this potentially dangerous problem:

OPTION #1: File your return electronically.

There are many benefits to e-filing. The one I want you to focus on now is this: When you e-file your return, you receive an electronic acknowledgement within 48 hours that repparttar 112715 IRS has accepted your return.

Bingo! Now you have proof positive that repparttar 112716 return was filed. 'Nuff said?

E-filing is rapidly becoming repparttar 112717 filing method of choice. But repparttar 112718 majority of returns are still filed on paper, so here's a second way to avoid repparttar 112719 "missing return" dilemma. OPTION #2: If you're a "paper filer", go to repparttar 112720 post office and spend a measly $4.05 to send repparttar 112721 letter via Certified Mail, Return Receipt Requested.

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