Getting into trouble with the IRS can be daunting for any taxpayer. An audit is something that can give you a great deal of stress, even if you have done nothing to deserve one. It is important to understand that audit notices are not meant only for people who intentionally evade taxes. Something as minor as errors and numerical discrepancies can get you in trouble. Still, an IRS notice has to be dealt with properly to resolve things, whatever the reason for getting one may be. Being aware of the right way to handle things can make all the difference. Here are some effective tips you can follow to survive an audit.
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Nothing is certain in life, they say, except for death and taxes. We all have to deal with taxes in one way or another, which would lead the average person to believe that we all have a relatively firm grasp on what taxes we pay. On the contrary, most of us are surprisingly uninformed about our taxes and how they work. There are actually two kinds of taxes that all of us pay–direct and indirect. While we all pay these taxes, very few of us really understand the difference between them. In order to be an informed citizen and an intelligent consumer, it is important to know the difference between direct and indirect taxes.
Some taxes are relatively straightforward and simple, while others can be rather complicated. A direct tax, to begin, is a tax that is imposed directly onto a specific group of people or organizations, and collected directly from them. Income tax, for example, is a tax that is imposed directly onto people in the United States who earn an income. This tax is collected directly from them, either in the form of pay withholding or a personal payment after filing. When you pay your income tax, you are being taxed directly, and if you overpay on this direct tax you are issued a direct refund.
Indirect taxes work in a rather different way. When an indirect tax is imposed, the tax is collected from someone other than the individual or entity responsible for the tax. If that sounds unusual, or possibly even criminal, think about it on a deeper level to see what is really happening. Consider sales tax. Depending on the city and state in which you live, you might pay a tax of anywhere from zero to ten percent on the items you purchase. This sales tax is imposed on the vendors who sell the items, but it is absorbed by the consumers who buy them.
With employers required to provide their employees their W2and 1099 forms by January 31, Americans have more than three months to file those dreaded tax returns. But for the procrastinators among us, we have good news. The deadline has been changed for 2012, giving taxpayers three extra days to file.
Generally the filing deadline is April 15 of each year. But when the deadline falls on a weekend, it’s pushed to the following Monday. Another day is added when the deadline falls on a federal holiday.