Tuesday, January 10, 2017

Beating The Tax Man, Legally: Ways To Save On Taxes

Image source: irs.com
Taxes are a tricky topic to tackle. Whenever small businesses get their mail from the IRS, the numbers can leave them dumbfounded. Since that money is being used for the smooth running and betterment of the country, then one can be sure that there is no getting out of this one. Taxes may be unavoidable, but there are ways to save money despite those deductibles. The best part about this is that they are completely legal. All that one needs is adequate tax planning knowledge for the entire year.

First and foremost, if employees are getting a big tax refund in the current year, then it only means that too much tax is being taken out of their paycheck every month. What the taxpayer should do is to file a new W-4 form with his employer so that he will be able to get more money out of their earnings.

Another classic method to lower the tax bill is to reduce the taxable income. One can do this by increasing their retirement savings; so, everyone should get a 401(k) and contribute more to it. There isn’t any loss because that money will be returned several folds once the employee retires.

Image source: financegourmet.com
Apparently, starting a business also translates to an improvement of one’s tax situation. This is because entrepreneurs have a higher degree of freedom when it comes to tax payments. They have the option of keeping more money in their company instead of declaring them as income. Furthermore, they can count certain costs as expenses as well. In many cases, donating to or building charities can also lower the levies.

Tax Tiger's team of experts is determined to provide protection to hardworking individuals against tax pressures and problems with the IRS. To know more, click here.



The Need For Tax Audit Representation

An individual or organization’s accounts and financial information can be audited by the IRS to make sure not only that the information they have submitted are in accordance with tax laws but also to verify if the correct amount of taxes has been filed.

Image source: morenews.pk

Those who undergo tax audit are typically randomly selected using a statistical formula. The selected taxpayer has its returns compared to “norms” developed based on random sample of similar returns and through a computer. Those whose returns vary significantly from the norm are more likely to be audited.

The IRS may also audit other businesses or investors who have had issues or transactions with the selected returns.

The IRS will initially contact the auditee by mail (never by telephone), and will subsequently manage the auditing process by mail or through a face-to-face interview at an IRS office, the taxpayer’s home or business location, or in an accountant’s office.

One of the rights provided by the IRS to the taxpayers is the right to representation, by oneself or an authorized representative.

Image source: finance.yahoo.com
The latter is the better alternative as tax laws are subject to interpretation, which means there is no such thing as a perfectly accurate tax return. IRS auditors could also attempt to expand the scope of the audit. Coordinating with seasoned tax representation firms or professionals can help taxpayers handle tax audits in the best way possible.

One of the leading tax representation and resolution firms in the industry, Tax Tiger has expertise in representing clients who are facing IRS and State audits. Click here to know more about the company’s services.