File your tax returns (even if you owe and can’t pay). One of the quickest ways to get into an audit is to not file your tax returns.
Think about your industry averages and common expenses. When you file a tax return the IRS will categorize your expenses and look for abnormal expense levels compared to your income and others in your same line of business.
Avoid Schedule C. Having a small business is a great tax saving strategy, but reporting it as a Sole-Proprietorship can dramatically increase your chances of an audit. Choose to file as a partnership or corporation when economically feasible. Make new plans for this year.
Avoid round numbers. This should be a no-brainer, but you would be surprised how many tax returns I review with round numbers. This is a major red flag. How many people actually spend EXACTLY $400 on office supplies in a given year?
Bottom line; don’t be afraid to take an expense that you’re entitled to, especially if you kept good records.
Tax return Copy
There are many reasons why you may need a copy of your tax return information from a prior year. Transcripts are free and available for the past three years.
Tax Return Transcript
A return transcript shows most line items from your tax return just as you filed it. It also includes any forms and schedules you filed with your return.
Here’s how to get a transcript:
- Order Online. The fastest way to get a Tax Return transcript is through the ‘Get Transcript’ tool available on IRS.gov order your transcript online and receive it by mail.
- Order by phone. Call 1-800-908-9946 and follow the prompts.
- Order by mail. Complete and mail Form 4506-T.
Actual Return Copy
- If you need an actual copy of your tax return, they are generally available for the current tax year and as far back as six years. The fee per copy is $50. Complete and mail Form 4506 to request a copy of your tax return. Mail your request to the IRS office listed on the form for your area.
Social Security Benefits may be taxable
You may have to pay federal income tax on part of your benefits.
Form SSA-1099 If you received Social Security benefits in 2015, you should receive a Form SSA-1099, Social Security Benefit Statement, showing the amount of your benefits.
Only Social Security If Social Security was your only income in 2015, your benefits may not be taxable. You also may not need to file a federal income tax return. If you get income from other sources you may have to pay taxes on some of your benefits.
Tax Formula Here’s a quick way to find out if you must pay taxes on your Social Security benefits: Add one-half of your Social Security to all your other income, including tax-exempt interest. Then compare the total to the base amount for your filing status. If your total is more than the base amount, some of your benefits may be taxable.
Base Amounts The three base amounts are:
$25,000 – if you are single, head of household, qualifying widow or widower with a dependent child or married filing separately and lived apart from your spouse for all of 2015.
$32,000 – if you are married filing jointly.
$0 – if you are married filing separately and lived with your spouse at any time during the year.