Seeing as the IRS has not received any large increases in budget or staffing, it should not be surprising that the number of audits on individual tax returns continues to decrease. This is a phenomenon that I know I mention from time to time, but seeing as audits will forever be a fear of the taxpayer, it must continue to be addressed.
This is then when I continue to state that the small amount of audits actually carried out by the IRS does not mean that it is worth trying to get away with something on your tax return. Think of this way – if you are facing an audit, do you want to go into it knowing that you legally used the system to your advantage or that there is no way it is going to end without you handing over more money (or worse)?
This recent article from Accounting Today gives a quick look at how the Tax Cuts and Jobs Act could be affecting the audit landscape, while also acknowledging it may take a few years before those ramifications are fully understood. It presents an interesting theory that the TCJA may have removed a lot of complexity that could trigger an audit for the average taxpayer and shift the percentage of audits to the wealthy (even though their total number of audits is also on the decline).
One could say this is a good thing because it made the tax system easier for many average taxpayers, which is certainly true in some cases. The system did not suddenly become simple, though, especially in the current financial landscape where more and more people are earning income outside of a regular, full-time job. Having someone who can guide you to make sure you are using the system to your greatest advantage while making sure your tax obligation is satisfied should still remain the best tactic for making sure you do not have to face an audit.
Consider it doing your part to keep those audit numbers down by doing what you’re supposed to do.
Fewer audits is certainly not a way that the IRS is trying to be nicer toward taxpayers, but it is an inadvertent advantage. The agency is doing other things, however, in an attempt to be more taxpayer-friendly.
In the wake of the draft of a widely revamped W4 form, the IRS has also drafted a new tax return for seniors and a draft for a new 1040 form. I don’t know how large an effect these will have as the amount of taxpayers who fill out these paper forms without electronic assistance is ever decreasing, but the aims are good. Again, simplifying things doesn’t necessarily make them simple.
Also, the IRS recently sent out communication that points people toward their Interactive Tax Assistant, which offers answers to many tax questions. Keep in mind, though, that the best tax answers come from those who know your personal situation, so never be afraid to turn to us when you can’t find answers elsewhere.
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