Tax planning serves a number of important purposes. Ideally, you are attempting to utilize strategies that can help minimize the amount of money that you must pay in tax. In addition, tax planning is also about managing your risk and potentially preventing future issues with the IRS. By taking the time now to exercise planning and forethought, you can avoid issues in the future.
An experienced New York tax lawyer from The Thorgood Law Firm helps you with the planning that you can do now after reviewing the facts and circumstances of your situation.
Why You May Have Issues with the IRS
The IRS may flag your tax return for additional attention after either a computerized or human review. There are numerous red flags that they may spot that could cause them to launch an audit. These may include:
- Tax filings that are made late or are incorrect
- Underreporting your income (your sources of income will make their own reports to the IRS)
- Excessive deductions on your tax return
- A drastic change in your tax situation from previous years
Through proper planning, you can potentially avoid these red flags and keep yourself from being subject to an IRS audit. It is vital that you stay on top of things before you file your return with the IRS.
Tax Strategies That Can Help Individual Filers
Filing your taxes on time and avoiding mistakes are the best possible strategies to avoid issues with the IRS in the future. Late filings may trigger increased scrutiny from the IRS. The agency tends to be more focused on taxpayers who have a history of failing to file their returns on time. They may view this as a sign that there are more potential issues with your tax return that they must scrutinize.
In addition, simple mistakes on your return can also result in the agency taking a closer look at what you have included. The IRS takes its first cut at reviewing your returns automatically, through the use of computer programs. They may be prompted to perform a more manual human review when there is an error. Then, you could find yourself being audited if the IRS agent determines that they have more questions.
Know Your Deductions and Exemptions
Improperly claiming an exemption or deduction is a red flag for the IRS that may spark a difficult audit. Then, you may have the deduction disallowed. When this happens, you must pay back taxes and penalties. You may need to return money that you received in your tax refund. Further, the IRS will look closely at other deductions you have claimed, and they may do so with an aura of suspicion. In the IRS’s thinking, there may be the proverbial smoke that reveals that there is a fire.
It is crucial that you know that you are on solid legal ground when you are claiming an exemption or deduction. You must have a sound understanding of the law and how it applies to you. An experienced tax lawyer can review your situation to ensure that you are taking all of the deductions that you are entitled to without doing anything improper. In that way, you can maximize your benefits under tax law, while reducing your risks of IRS enforcement action.
Keep Meticulous Tax Records to Avoid IRS Problems
One strategy that can help you avoid problems, even if the IRS audits you, is keeping meticulous records during the year. If the IRS contacts you, they will expect that you can provide them with records that evidence your position. They certainly demand that you provide these records as part of an audit. If the IRS sees that your records are incomplete, it may disallow certain deductions that you have claimed. The agency may be more likely to use the numbers that they have as the basis of their calculations, which could result in back taxes and penalties being assessed. Having a good recordkeeping system in place now can save you problems in the future.
Maintain Internal Controls to Avoid Tax Issues
If you are filing a business tax return, it is essential that you institute strict internal controls and keep them in place. Here, controls mean that you separate your business matters from personal ones when it comes to matters of taxes. If the two become commingled, you may have a tough time explaining things to the IRS when there is an audit. Even worse, you may lose some of the valuable tax breaks that a business is allowed under the Internal Revenue Code. A tax attorney can help you develop the internal controls and test them periodically to ensure that they are working. If there are any weaknesses, your lawyer can help you make the necessary changes to protect yourself.
Why Hiring a Tax Lawyer Can Help You with Planning
Properly planning for longer-term tax obligations requires a knowledge of both irs lawyer nyc and procedures. There are an extensive number of regulations that you must know to best plan. Further, how the IRS interprets and implements its own regulations can also be critical, especially if you are involved in any disputes with the agency. A tax lawyer can counsel you on how to work within the laws and regulations to minimize your obligations and ensure that you pay the correct amount that you owe. They can assist you with a personalized strategy that is designed to fit your own situation.
Contact a New York Tax Lawyer Today
Do not put yourself in a position where you may experience legal issues with the IRS in the future. A call to a tax lawyer at The Thorgood Law Firm can be the first step towards a strategy that could both minimize your potential tax obligation and keep you out of trouble with the IRS. You can schedule an appointment to speak with a tax lawyer by messaging us online or by calling us today at (212) 490-0704. We maintain a 50-state practice, helping clients across the country with their tax law issues.
