No one does cringey vibes better than the Internal Revenue Service! Well… maybe they're second in line to Baby Boomers twerkin' and lip syncin' on TikTok.
Taxes are an American way of life, at least until we try throwing tea off the side of a boat again. Each year, your tax return heads on over to the IRS for approval. Most of the time, things go through no problem, but if you make any mistakes, you could get audited.
During an IRS audit, government finance nerds get all up into your personal business and bank accounts to make sure everything lines up with what you reported on your taxes. If they find any snafus, there's a chance that you'll need to answer to Daddy TaxMan...and maybe even pay a penalty.
The new Inflation Reduction Act just added 87,000 more IRS agents (YIKES) to their roster, which means more eyes on your tax returns. Now, before we dig in, keep in mind that only 1% of Americans get tapped by the IRS for an audit. But while the odds are likely in your favor, it's smart to stay off their radar as much as humanly possible.
In our signature 5 Fast Facts Fashion, here's 5 quick tips on how you can keep Uncle Sam away from your front door:
1. Income Thresholds Matter - Don't hate the player, hate the game! More money, more problems is a true statement, especially when it comes to taxes. The more money you make, the more IRS eyeballs you'll have on your tax return. We're not going to tell you to make less, because #ballin', but just be aware that's the case.
2. Don't Overestimate Donations - OK, we know that bag full of clothes you took to Goodwill wasn't really worth $1,000,000. And so does the IRS. That might be an exaggerated example, but you get the idea. Make sure all donation write-offs are correct and at least in a reasonable ballpark to keep the government out of your hair.
3. Count Your Beans - Not all of us are math geniuses, and thank the Lord for accountants. If you're a lone wolf tax filer, triple and quadruple check your math to make sure everything adds up. Even the smallest mistakes could trigger an audit, so consider having a tax specialist or accountant button everything up for you before you send off your tax return.
4. Report All Income - If you leave off income received, even if it's a small amount, you might be headed straight to Auditville (population: YOU). If the IRS catches a significant deposit in your bank account that can't be traced to your taxes, you could be on the hook for paying back taxes and get a slap on the wrist in the form of a penalty.
5. Sign The Dotted Line - We know, we sound like your least favorite teacher from elementary school, but don't forget to officially SIGN your tax return! Failure to sign seems like a tiny mistake, but it's actually one of the biggest tip offs that something's fishy with your taxes. It gives the snoopers a reason to snoop even further.
Guess what? The President does run the IRS...but your local & state government reps can definitely influence tax policies that affect you! Here’s three small things you can do that make a BIG impact:
