The IRS audits only a small percentage of business and personal tax returns annually, because they lack the manpower to do extensive audits. However, there are “Red Flags” the tax return scanning system picks up that could target your corporate or personal return.

If your return is selected for review, you have nothing to worry about if you haven’t mis-stated the numbers on your return, and you have receipts to back you up.

Even though the odds of you getting audited may seem low, those odds increase dramatically based on your income and the types and amounts of deductions you claim. The higher your income the more likely your return will be selected, math errors make you more suspect, and taking larger than normal amounts of deductions in certain categories can trigger an audit. (more…)

Before you send your tax information off to your tax preparer, you might want to give it one last look to make sure you have not missed any tax deductions that could cut your tax bill for 2011.

That’s right, it’s the 2011 tax season, and you should already be looking for those federal income tax deductions that can legally lower your tax bill.

Here are a number of the typical deductions that you want to make sure your tax preparer knows about so you get the full federal income tax deduction allowed.

Traditional IRA contributions

You have until April 17, 2012, to contribute up to $5,000 to a traditional IRA for 2011 and deduct it on your tax return. You need to know the guidelines, so here they are in brief:

If you weren’t covered by an employer’s retirement plan in 2011, you can generally deduct your contribution in full.

If you were covered by an employer plan, you can only take a deduction if your adjusted gross income was below $66,000 ($109,000 for married couples).

If your spouse was covered but you weren’t, you can take a deduction if your combined adjusted gross income was below $179,000.

If you were age 50 or older on the last day of 2011, you can contribute up to $6,000. (more…)

The IRS with little official fanfare and no real advance warning began a “national research project” to study (1) payroll taxes, (2) fringe benefits, (3) independent contractor, (4) expense reimbursements and (5) other related “payroll” issues.

Use of the phrase “National Research Project” seems fairly innocuous and is easily confused with the IRS’ more benign National Research Program. The goal of the latter is to design a strategy to collect data that will be used to measure filing and reporting compliance with the guiding principle “to minimize taxpayer burden as data are [sic] collected.”

Confusion of the National Research Project with the National Research Program may be the IRS’ intent, because there have been few public statements that actually describe what is in reality a massive audit initiative.

As the rumored audits have begun, the IRS finally published “Headliner Volume 280″ describing in only the vaguest terms the audits being unleashed over the next three years. The National Research Program only created ripples in the vast sea of issues that taxpayers must address and many advisors have drawn the same conclusion with respect to the current initiative since the programs have similar names. (more…)

[Video] Money Management Solutions for U.S. Congress – 545 people – an article by Charley Reese presented in video format by Money Management Solutions, Inc. (more…)