Who's been through an IRS audit?

[hughb]

The IRS has always been helpful whenever I needed it. I've never had a problem with them that was their fault. Back in 91 I was trying to get help reporting income that I had not been 1099'd on. I waited until April 14 to call in for help and the person told me what forms to file and how to fill them out step by step. She sounded like a nice lady who had been overworked and a little tired. And then right near the end of the call another voice comes on the line. It was some arrogant son-of-a-bitch reminding me that I had to have my envelope postmarked by tommorrow or I was going to be fined, etc.

The reason I waited so long was because I was debating whether or not I needed to report it. It was under $10K, but only a little. Plus, I wasn't sure if the IRS got the 1099 even though I didn't. I figured better safe than sorry, so I reported it, but frankly I don't think they would have ever noticed if I didn't.

 

[sim03]

Quote from hughb:

The reason I waited so long was because I was debating whether or not I needed to report it. It was under $10K, but only a little. Plus, I wasn't sure if the IRS got the 1099 even though I didn't. I figured better safe than sorry, so I reported it, but frankly I don't think they would have ever noticed if I didn't.

You mean $10, not $10K, I hope.

The smart strategy by far is to always report even tiny - especially tiny - amounts of income.

Why, you may ask? Doing so will barely, if at all, change your bottom line tax bill, but may come in really handy down the road (e.g., in an examination or an audit) as powerful prima facie evidence of your aboveboard truthfulness and honesty in all tax matters, large and small.

 

[krazykarl]

Quote from sim03:

You mean $10, not $10K, I hope.

The smart strategy by far is to always report even tiny - especially tiny - amounts of income.

Why, you may ask? Doing so will barely, if at all, change your bottom line tax bill, but may come in really handy down the road (e.g., in an examination or an audit) as powerful prima facie evidence of your aboveboard truthfulness and honesty in all tax matters, large and small.

He likely meant 10k as there is a minimum amount the IRS wants to have reported.(somewhere over 9k, less than 10k - can't remember.)

I'll echo the sentiment of others in the thread - don't try and get cute, give uncle Sam his money for protecting our a$$e$ from terrorists and move on.


Regards,

 

[TM_Direct]

Quote from balda:

When you take an extension you send a check for "roughly how much you owe".

Your 25k short and four years too lat with your advice ....thanks anyway...life lesson learned

 

[DataCruncher]

Quote from TM_Direct:

Your 25k short and four years too lat with your advice ....thanks anyway...life lesson learned

So did you rack up crazy interest on what you owed to the IRS before you paid it?


I would never intentionally cheat the government, but my tax situation is complex enough that it's hard to figure out what I owe

 

[NY0BScalper]

Quote from krazykarl:


give uncle Sam his money for protecting our a$$e$ from terrorists and move on.


Regards,

lol, protecting us from terrorists.

that's a good one. was the $6,000,000,000 we gave to Al Qaeda money spent to "protect us from terrorists?" lol.

 

[Mvic]

Trader status is a red flag for an audit, the IRS sets the bar high enough that most hobby traders will not qualify and even some that trade full time may not qualify, and yes has nothing to do with hardware but everything to do with time spent, source of income, business records and $ amount traded. If it is a loss you are trying to claim against other income you will only be able to do that if you elected mark to market last year otherwise you will be limited to regular $3k for losses. If you are going to file trader status suggest you get some advice from someone like http://www.greencompany.com/index.shtml. Find out before you file if you qualify.

http://www.greencompany.com/EducationCenter/GTTRecTraderTaxStatus.shtml

 

[DeeDeeTwo]

Quote from Mvic:

Trader status is a red flag for an audit, the IRS sets the bar high enough that most hobby traders will not qualify and even some that trade full time may not qualify, and yes has nothing to do with hardware but everything to do with time spent, source of income, business records and $ amount traded. If it is a loss you are trying to claim against other income you will only be able to do that if you elected mark to market last year otherwise you will be limited to regular $3k for losses. If you are going to file trader status suggest you get some advice from someone like http://www.greencompany.com/index.shtml. Find out before you file if you qualify.

http://www.greencompany.com/EducationCenter/GTTRecTraderTaxStatus.shtml

If you are a professional trader...
It is assumed that you are running a well-managed business...
And have all the support staff required.

Specifically...
You will have a first class accounting firm.

I have been contacted 3 times if 15 year by Revenue Canada...
And after speaking with me AND my accounting firm...
They just gave up... much easier targets out there.

This is a core business principle:

Make yourself a "hard target"... and no one will f*ck with you...
They will just go after a "softer target".

 

[lindq]

Quote from DataCruncher:

I haven't gotten contacted or filed yet. But I'm wondering, do they ever show up at a trader's house and say something to the effect of "well we gotta go look at your trading setup and computers. If it's not something we judge a professional setup, than you can't claim trader tax status"

I've been through just about every kind of audit...personal and business. And I've never lost, including a challenge to my filing for trader status, even though the SOBs put me through the ringer with a look at 3 years of returns and a line by line challenge to my trading records.

But if you are an active trader and it is your main source of income and you are not employed in another job, then you should not fear filing for trader status.

However, if you are in doubt, or if you have any other skeletons in your financial closet over the past few years that you would rather not discuss with the government, then don't do it. You always need to be prepared to answer their questions, and show the goods.

 

[SideShowBob]

Anyone know how long after you file you can expect to be in the clear? Will you get audited usually within 2-3 months, or will they get you a year later?