Stock market benchmark indices
If you plan to trade stocks, it helps to get an understanding of basic terms that are mentioned frequently on TV, radio, and social media. There are three Major indices:…
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Are these good times to invest in the stock market?
YES, definitely! These are the best of times to invest in the stock market. If you are not trading stocks now, you are missing the longest bull run in history….
What to do when the stock market dives
Last week’s sell off inspired me to write today’s article to caution you when stock markets dive. When stock prices drop, one’s first reaction is to sell. That’s the worst…
Six special audit triggers
1. DEALING in Cryptocurrencies People are not reporting transactions with Bitcoin, Ethereum, or Litecoin. The general public may not be aware that they are reportable. They may also not know…
What to do when you are audited
FIRST, you get a notice called a “contact letter” by mail – postal mail. The IRS does not reach out to taxpayers via email or phone; if that happens, you are…
What do you bring to an IRS audit?
THE IRS will tell you what records to bring to an audit. The requested documents varies based on your situation. They will need support for income that you report and…
What happens after an IRS audit is completed?
WHEN an audit is completed, you will be notified of the Agency’s determination: 1. No change: IRS accepts your returns as filed. You will be asked to sign the examination report….
Is going to an unethical tax preparer dangerous?
YES, it can be. Going to a tax preparer who increases your refunds with phantom deductions is dangerous. You may have to return that nice refund … and more, sometimes…
Does shrinking IRS budget reduce your chance of being audited?
YES, shrinking budget reduces your chance of getting grilled by the IRS. • The main reason for the decline: IRS budget and staff levels are down. • Tax collectors are…
Does rental property attract IRS audit?
NO, merely renting out your house, condo, or apartment does not attract IRS audits. But yes, there are rental items that attract IRS scrutiny: • Deducting expenses that are disproportionately…
Which has less chances of IRS audits – paper or e-file?
BEING audited by the IRS is dreaded by most taxpayers. My clients constantly asked which method increase their chances of getting audited. Let’s compare two methods of filing your tax…
Can mistakes get you audited by the IRS?
YES, definitely. Mistakes can get you audited by the IRS. Let’s discuss common mistakes that can get you into trouble. 1. Filing On Paper Paper-filed error rate is 21% compared…
Are you taking too many itemized deductions?
THE Internal Revenue Service currently audits less than 1% of tax returns annually, so your probability of attracting IRS audit is incredibly low. Taking deductions that are higher than average deductions…
How does the IRS select tax returns to be audited?
IRS scores tax returns for audit. The higher the score, the more likelihood that you’ll be chosen for audit. 1. Scoring system: The IRS uses a Discriminant Function System (DIF)…
How does IRS score your tax returns for audit?
E-Filed Returns: • Electronic data are transmitted to a centralized Submission Processing Center. • Tax preparation software assigns a unique 14-digit Declaration Control Number to each return. • A unique…
How does the IRS look into your hobby losses?
THE classic “hobby loss” situation involves a professional or businessperson who starts Zumba classes, dog-breeding business or a farm. If the IRS determines that the Zumba, dog-breeding, or farm project…
Do hobby loses attract IRS audits?
YES, it does. Losses from hobbies attract IRS audits. It’s cool to run a business that you enjoy, such as photography, dance studio, martial arts, dog-breeding, farming, and other leisurely…
Do you know that some IRS forms attract audits?
SOME IRS forms attract audits. Merely filing them causes the Agency to look at your tax returns. Here are some of them. Form 1099: You may have had a side…
Should you file single, separate, or joint tax returns for a green card?
OUR tax laws give you choices of filing status to prepare your income tax returns. Which one is appropriate for a married person petitioning (or being petitioned by) your spouse?…
Can you be deported for filing false tax returns?
YES, you can be. It’s terrible, but it happens. In a landmark case, the Supreme Court held that a conviction for willfully filing a false tax return is a deportable…
The problem with undocumented workers’ use of each other’s social security
SOME undocumented workers use other people’s Social Security numbers (SSN). That creates a problem. Then they use another number to file their income tax returns – their own Individual Identification…
How undocumented workers help fund our social security system
U.S. taxpayers file millions of individual tax returns each year. Some of these tax returns contain W-2s with fake Social Security numbers. Some belong to people who get married and…
Do undocumented immigrants really hurt our social security system?
NO, they don’t; in fact, undocumented workers help shore up our Social Security system. You see, they pay millions, no, make that billions with a “b” to a system that…
Affected transactions and sanctions under the Bank Secrecy Act (BSA)
AFFECTED Transactions A. Currency Transaction Report (CTR): You must report cash transactions in excess of $10,000 during the same business day. The amount over $10,000 can be either in one…
Foreign Bank Account Reporting (FBAR) penalties for noncompliant US citizens residing abroad
IF you are a US citizen (or dual citizen) residing outside the U.S. but do not report your foreign accounts, you may be subject to harsh penalties—penalties that are more…
Should you file FBAR for foreign bank accounts?
IF you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial…
The ABCs of Foreign Bank and Financial Accounts (FBAR)
IF you have offshore bank accounts, should you report the accounts to the U.S. government? Yes, if the aggregate balances exceed $10,000 at any time during the year. What if…
Frequently asked questions on FBAR bank accounts
Q. AM I required to report bank accounts in a foreign country? A. Yes, if you have more than $10,000 at any time outside the U.S. Q. Am I exempted…
Fraud audit – What to do
CRIMINAL Investigations can be initiated from information obtained from within the IRS when a Revenue Agent (auditor) or Revenue Officer (collection) detects possible fraud. Information is also routinely received from…
IRS fraud audit warning signs
THE Internal Revenue Service (IRS) Criminal Investigation Division (CID) conducts investigations regarding violations of the Internal Revenue Code, the Bank Secrecy Act, and Money Laundering statutes. What are warning signs…