IRS Problems Don’t Have to Make Your Life Miserable!

If you’ve ever dealt with an IRS dispute, you know exactly how miserable the process can be. The IRS is often referred to as “the world’s most brutal collection agency”—and with good reason. They are completely focused on their goal of extracting every single penny that they are owed, and they’ll use very aggressive tactics to do so. Threatening phone calls, intimidating letters… and sometimes they’ll decide to pay you a visit in person.

The best way to avoid this scenario, obviously, is to avoid running afoul of the Internal Revenue Service in the first place. To that end, Forbes.com recently published an article with three helpful tips to reduce the probability of being audited:

1. Keep Good Records. You might think good records help only if you’re audited. Actually keeping good records can keep you out of trouble in the first place. Most audits are by correspondence: your deductions will be disallowed unless you produce records substantiating them. To respond quickly and thoroughly, be prepared.

2. Respect Those 1099s. Much of what the IRS does is information return matching–the endless correlation of taxpayer identification numbers and payments. Even small mismatches will be caught and can trigger bigger problems. There are different Forms 1099 for miscellaneous income (Form 1099-MISC), interest (Form 1099-INT), etc.

How you handle them year round matters. Don’t just stick them in a drawer when they arrive, look at them. If you receive an incorrect 1099 (as is common), contact the payor that issued it. Explain the error and ask if they have already sent a copy to the IRS. If they have, ask for a “corrected” 1099 (there’s a special box for this).

You need a system to record and track 1099s. That’s exactly what the IRS does.

3. Keep Business and Personal Separate. You may do things with a dual motive like a pleasant lunch with a business colleague, a boondoggle with your best customer or buying a vacation home you also intend as an investment. But your tax life will be easier if you avoid morphing personal into business, including:

  • Deducting the cost of your divorce because your business is at risk;
  • Deducting a miserable vacation with a client; or
  • Claiming your hobby was really for profit.

It’s safer to separate your business and personal lives. Simple but effective.

These tips will help you stay out of trouble with the IRS. But if it’s too late for that, don’t despair! At IRSALLSTAR.com, we specialize in dealing with the IRS so that you don’t have to. We will put a stop to intimidating phone calls and other threatening tactics. We’ll work tirelessly to achieve the most favorable solution for your situation. We’ll remove the stress that is caused by dealing directly with the IRS. Don’t let IRS Problems make your life miserable… give us a call today if you’d like to learn more!