What Are You Looking For?
Before scouring your paperwork and reviewing your tax return line by line, which you may or may not end up doing, you’ll want to consider the general area(s) on which the IRS has focused their attention in their notice. They tend to look for what they consider “significant” items or discrepancies. Of course, the term “significant” can mean many different things, but in the case of the IRS it often means one of the following:
• Expenses that far exceed income
• Deductions that are disproportionate to the rest of the return
• Items reported in the wrong places
• Blank spaces where items should go
• Significant losses, raising the question of how you were able to pay your bills
These are some of the more frequent areas ...