Comments on: Being Right Isn’t the Same as Not Getting Audited http://www.taxgirl.com/being-right-isnt-the-same-as-not-getting-audited/ Paying taxes is painful... but reading about them shouldn't be. Sat, 21 Nov 2009 12:33:00 -0500 http://wordpress.org/?v=2.8.6 hourly 1 By: Kelly http://www.taxgirl.com/being-right-isnt-the-same-as-not-getting-audited/comment-page-1/#comment-6303 Kelly Sat, 29 Mar 2008 11:11:52 +0000 http://www.taxgirl.com/being-right-isnt-the-same-as-not-getting-audited/#comment-6303 Bridget - Re the size of the refund, I wasn't so much stressing the 10% as the idea that the size of the refund is very large. And notwithstanding the economics (again, pointed out by Tom), for the income bracket, I think the refund is above average. That would worry me. But more importantly, your question about audits... Absolutely! The IRS merely processes returns at a first go. You could well be issued a refund that the IRS later believes you are not entitled to - and asks for it back (plus interest). You should never assume that if you get your refund back, there's no problem - especially if you are aware of issues on your return. Absent fraud or substantial under-reporting (both of which increase the statute of limitations), the IRS may review your return for up to three years after you submit it. Bridget -
Re the size of the refund, I wasn’t so much stressing the 10% as the idea that the size of the refund is very large. And notwithstanding the economics (again, pointed out by Tom), for the income bracket, I think the refund is above average. That would worry me.
But more importantly, your question about audits… Absolutely! The IRS merely processes returns at a first go. You could well be issued a refund that the IRS later believes you are not entitled to – and asks for it back (plus interest). You should never assume that if you get your refund back, there’s no problem – especially if you are aware of issues on your return. Absent fraud or substantial under-reporting (both of which increase the statute of limitations), the IRS may review your return for up to three years after you submit it.

]]> By: Kelly http://www.taxgirl.com/being-right-isnt-the-same-as-not-getting-audited/comment-page-1/#comment-6304 Kelly Sat, 29 Mar 2008 11:07:08 +0000 http://www.taxgirl.com/being-right-isnt-the-same-as-not-getting-audited/#comment-6304 Tom - I agree! If you owe Uncle Sam, you pay interest. If he owes you, he doesn't pay you interest. You don't want to be in a situation where Uncle Sam has a lot of your money, interest-free. That's one of my frustrations with the RALs (refund anticipation loans), too. I know folks that are DYING to get their refunds and will therefore cough up more than 100% interest for a loan to get it quicker - if you just make a few changes in your tax planning, you could have that money throughout the year. Tom -
I agree! If you owe Uncle Sam, you pay interest. If he owes you, he doesn’t pay you interest. You don’t want to be in a situation where Uncle Sam has a lot of your money, interest-free.
That’s one of my frustrations with the RALs (refund anticipation loans), too. I know folks that are DYING to get their refunds and will therefore cough up more than 100% interest for a loan to get it quicker – if you just make a few changes in your tax planning, you could have that money throughout the year.

]]> By: Tom Durso http://www.taxgirl.com/being-right-isnt-the-same-as-not-getting-audited/comment-page-1/#comment-6302 Tom Durso Sat, 29 Mar 2008 09:51:59 +0000 http://www.taxgirl.com/being-right-isnt-the-same-as-not-getting-audited/#comment-6302 If the audit argument doesn't get him, point out to your friend that for the last year he's given Uncle Sam a hefty, INTEREST-FREE loan. I'm in the same boat: Went freelance last year, had to pay estimated taxes, and overestimated by a large amount. That won't happen this year. I love my uncle, but not enough to loan him that kind of scratch. If the audit argument doesn’t get him, point out to your friend that for the last year he’s given Uncle Sam a hefty, INTEREST-FREE loan. I’m in the same boat: Went freelance last year, had to pay estimated taxes, and overestimated by a large amount. That won’t happen this year. I love my uncle, but not enough to loan him that kind of scratch.

]]> By: Bridget Wright http://www.taxgirl.com/being-right-isnt-the-same-as-not-getting-audited/comment-page-1/#comment-6305 Bridget Wright Fri, 28 Mar 2008 21:52:57 +0000 http://www.taxgirl.com/being-right-isnt-the-same-as-not-getting-audited/#comment-6305 10% of his income? That doesn't sound so bad. But, what I wonder is if you have the same pattern year after year each time, will the IRS see that pattern and then flog you if it changes? And you mention that audits aren't common...it seems like every third person you talk to 1.) has been audited by the IRS or 2.) is about to be audited by the IRS. I read your post on things that flag the IRS sniffers and can cause potential problems, but I think it's just most folks nagging fear is that they will get "the notice" in the mail and ask to bring in their brown paper bag of receipts. And one more ramble: if you do your taxes, pay the IRS or get a refund back, can they come back after that and STILL audit you? Wouldn't they have caught any discrepancies before they give you the refund? OK, that's it taxgirl. What do you think? 10% of his income? That doesn’t sound so bad. But, what I wonder is if you have the same pattern year after year each time, will the IRS see that pattern and then flog you if it changes?

And you mention that audits aren’t common…it seems like every third person you talk to 1.) has been audited by the IRS or 2.) is about to be audited by the IRS.

I read your post on things that flag the IRS sniffers and can cause potential problems, but I think it’s just most folks nagging fear is that they will get “the notice” in the mail and ask to bring in their brown paper bag of receipts.

And one more ramble: if you do your taxes, pay the IRS or get a refund back, can they come back after that and STILL audit you? Wouldn’t they have caught any discrepancies before they give you the refund?

OK, that’s it taxgirl. What do you think?

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