Tax Return Filing and Evaluation Preparation
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As the income season approaches near, businesses and companies are reminded to gather documents, calculate their debts, and file their tax returns on schedule. However, for many, the process of tax return filing can be a intimidating task, especially when there's a chance of being reviewed by the tax agencies.
In this article, we will provide an summary of the process of tax return filing and the steps one can take to prepare for a potential evaluation.
The first step in the process of tax return filing is to collect all relevant documents, including financial statements, business records, and receipts for credits. It is essential to keep accurate and detailed records of all economic transactions throughout the year to ensure that the tax return is prepared accurately.
Once all the necessary documents are gathered, one can start preparing the tax return. The individual or business can either hire a tax professional, such as a certified public accountant (CPA) or an enrolled representative (EA), to prepare the tax return or use tax preparation programs, such as TurboTax or H&R Block, to prepare the return on their own.
One of the most critical aspects of tax return filing is to ensure that the tax return is accurate and complete. A single error or omission can lead to delays in processing the return or even trigger an evaluation. Therefore, it is essential to review the tax return carefully before submitting it to the tax authorities.
In addition to preparing the tax return, it is also essential to prepare for a potential audit. According to the Internal Revenue Service (IRS), there are several indicators that increase the risk of being audited, including:
- Itemized deductions that are high compared to earning
- Charitable contributions that exceed the normal deduction
- Large capital gains from the sale of properties
- Self-business income
- Large and unusual business costs
In the event of an audit, it is essential to be prepared and professional. Here are some tips to keep in mind:
- React promptly to any audit notices and follow the instructions carefully
- Keep all communication with the reviewer professional and respectful
- Be prepared to provide detailed explanations and records of all transactions and credits
- Avoid making any statements that can be misinterpreted or used against you
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