How To Avoid An Audit By The Irs Part Two

Another thing that makes the Internal Revenue Service wary is hobby losses

. Last year the Internal Revenue Service handed its agents a manual about how to find hobby losses, which is when tax payers underwrite activities they enjoy - like soccer - by labeling them as businesses and claiming a loss on a Schedule C under the guise of self employment. Remember that any Schedule C that lists a loss will be under scrutiny, especially if your new business has something to do with anything enjoyable or fun.

Even though there isn't anything wrong with filing your own tax return, if you hire the help of a tax preparer, make sure that they are on the up and up. The Internal Revenue Service has pretty much come out and said that it keeps a list of tax professionals that they find wary, but they will not tell you who these people are.

So always keep in mind that using a tax preparers who claims that they can get you bigger refunds than others, takes their fees out of a cut of the refund, or suggests that you do anything that may seem shady is not a safe idea, no matter how enticing their promises or suggestions may sound.

And even though this might seem obvious to you, a lot people still don't get the fact that you can not legally claim that you don't owe taxes because the tax system is voluntary, or you have a Fifth Amendment right against filing self-incriminating tax returns. The IRS will just add penalties to the money you already owe because these are "frivolous arguments," and the courts will support it.

Finally, even if you do manage to pull the wool over the eyes of the Internal Revenue Service, do not go around bragging about it. One thing that a number of people do not know is that the IRS is now authorized to pay snitches a lot of money to rat you out!

by: Mallory Megan

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