There are many things that can go wrong on an individual’s or an organization’s tax reports, and sadly, many of these are preventable. Even when you do everything in your power to provide only accurate and honest information, you can still commit a tiny mistake that can still result in an inquiry from the IRS.
Despite already knowing the huge impact an IRS audit can have on a person or a business, many individuals and organizations still fall into the many different traps of the complex world of taxes. Due to the sensitivity and complexity of the taxing process, you need to practice extreme caution every time you have to do something relating to your returns.
CPAs in Utah and the rest of the U.S. note that accidents or unintentional errors can lead not only to IRS audits, but also significant losses.
Anything considered negligence by the IRS can deal a huge blow to your financial reputation. Some of the most common cases include failure to indicate changes in your life (for personal taxes) or your business, such as an increase in the number of employees. Forgetting to indicate whether you carry health care or is exempt from it can also lead not just to an IRS audit, but a penalty as well.
Taxpayers — both individuals and business owners — have tried tax-saving tricks, like stating personal expenses as business expenses, but only brought them to even bigger trouble. An extremely common example is attributing the purchase and/or use of a vehicle as a business expense.
You can get tax deductions from automobiles used for your business, but it should remain strictly for professional uses. Another common intentional mistake is stating claiming the use of a guest bedroom as a house office, when in fact, it serves more than just an office.
It’s best to understand the importance of getting professional advice when it comes to your taxes. Always remember that even the most honest of all taxpayers can still become the subject of an IRS inquiry, so it is best to have a trained and licensed CPA taking care of your taxes.