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Responding to an IRS notice

Georgia residents who receive a letter from the IRS should respond to it as quickly as possible. This is generally true whether a person has received an audit notice or a request for more information. In some cases, the IRS is writing to let a person know that he or she used the wrong Social Security number or otherwise provided incorrect information on a return.

In such a scenario, calling the agency and verifying the identifying information used to file a return could be enough to resolve the problem. It is possible that the IRS will find a discrepancy in how much tax a person paid compared to what its records show a person should have paid. If that happens, a taxpayer can send in copies of payments made either throughout the year or when filing a return.

How to file a tax extension

Georgia residents who can't file their tax return by the April 17 deadline are entitled to ask for an additional six months to do so. In most cases, the extension request is granted automatically. Furthermore, it is generally possible to do so by filing IRS Form 4868 or through a taxpayer's preferred tax filing software program. It is important to point out that this is only an extension to file the return itself.

Any taxes owed to the IRS are still due by the April 17 deadline. As a general rule, it is a good idea for an individual to file a tax return or an extension even if he or she cannot pay a balance owed. This is because the IRS levies a 5 percent penalty per month up to 25 percent of an unpaid balance unless a person has a good reason why this wasn't done on time.

How the tax audit rate impacts Americans

The IRS audits less than 1 percent of returns submitted by individuals and partnerships. Therefore, it could stand to reason that taxpayers in Georgia and throughout the country have more incentive to cheat on their taxes. However, the truth is that recent changes to the tax code make it harder to do so. It could also be more difficult than people think to avoid reporting income to the IRS because most employers and other parties report an individual's earnings to the government.

The IRS has found that only 1 percent of income is not reported when there is reporting or withholding mechanisms in place. Generally, only the highest-earning individuals or businesses that are paid in cash can effectively avoid third-party earnings reports to the government. Those who don't itemize may not be able to take tax deductions related to mortgage interest or other expenses. Therefore, they may not have a chance to cheat on their taxes even if the IRS doesn't come after them.

Staying prepared in case of an IRS audit

Many companies and business owners in Georgia can begin to develop a sense of complacency about the danger of an IRS audit for their firm, especially given the news that IRS resources have been depleted. There have been cuts to the agency's budget over the past few years that have meant that the tax authority's Large Business and Internationa division takes up fewer examinations and makes smaller audit adjustments. Many business owners complete their taxes and rest assured that they do not need to be concerned about an IRS audit.

However, the passage of comprehensive tax reform in December 2017 could lead to significant changes in both the number of audits and the level of care that businesses must take in preparing their records. Many tax professionals are awaiting guidance from the IRS and the Treasury Departments and looking into creative strategies that make use of changes in the law. The tax reforms include reduced tax rates and accelerated expenses, but can also elevate the potential of being selected for an IRS audit.

Understanding the DIF and other IRS auditing standards

Like most Americans, you may be concerned that the IRS will one day audit you. It has not happened yet, but you are convinced that it will. It is only a matter of time.

The good news is that only a very small portion of tax returns received by the IRS signal the need for further explanation, and the agency has a system for that: It is known as the DIF.

Anticipating a tax audit

Business owners in Georgia typically understand the importance of maintaining good records so that they can meet their tax responsibilities. Few anticipate being subjected to an audit. However, some business owners have taken advantage of recent changes in tax law to reduce the tax liability of their businesses. As a result, the IRS may be looking more closely at the tax returns filed by these businesses.

Because the IRS can audit any return that is less than three years old, it is essential for business owners to protect themselves against this possibility. This means that companies should keep good records, retain copies of relevant documents and spreadsheets, and work with accountants and other financial personnel to ensure that their processes are in order.

Offshore Voluntary Disclosure Program ends in Sept. 2018

Georgians who have bank accounts and assets located overseas must report them to the Internal Revenue Service. The IRS has announced that it is ending the Overseas Voluntary Disclosure Program, or OVDP, on Sept. 28, 2018. Taxpayers who have undisclosed foreign assets have until then to voluntarily disclose their overseas accounts and assets without facing possible criminal prosecution.

The OVDP was started in 2009. It allows taxpayers who have previously failed to report their foreign income to come into compliance voluntarily. Since the program's start, 56,000 people have taken advantage of it and have paid $11.1 billion in penalties, interest and back taxes. The IRS stated that it had always intended to end the program and that the time to do so is now.

Tax errors can cause refund delays

To avoid delays in receiving tax refunds, Georgia residents should take care to avoid certain common mistakes when completing their returns. While many people may believe that only significant mistakes will cause the Internal Revenue Service to hold on to their refunds, many delays are actually caused by easily preventable mistakes.

One common error is putting the incorrect name on a tax return. Taxpayers are advised to provide the name that is printed on their Social Security card. If a person changes their name, the Social Security Administration should be contacted so that it and the IRS will have the same information.

How taxes affect your Social Security disability benefits

Filing taxes is a confusing and sometimes stressful process for many people. To ensure that they file properly, many people seek assistance with their taxes

Whether people are filing themselves or getting help, it is important to understand the aspects that affect their taxes. For those who receive Social Security benefits, there are a few important details to be aware of. For additional answers, it may be beneficial to consult with a local tax attorney.

Handling tax debts

Taxpayers in Georgia who have a balance when they complete their returns are not alone. The Internal Revenue Service reports that more than 18 million people in the country owed federal taxes in September 2014. Annually, around 10 million people have to pay tax penalties.

However, people who owe federal taxes do have options. There are certain steps they can take to reduce their tax penalties and resolve their tax liabilities.

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