Tax Lawyer's Blog

I found a new tax blog I like (new to me, anyway).

It’s Diane Kennedy’s Tax Loopholes.

Check it out.

In a recent post titled How Much Does a Tax Audit Cost You?  Diane confirmed what we have said here and elsewhere many times before:

Have you ever had an IRS audit? If you did and you’re like the average American who does get the audit notice, you can count on paying $5,500 in extra taxes.

And that’s before you count in penalties and interest and accounting and legal fees. Add that all up and you might find that you better be ready to write a check for $8,000 or more.

Of course, remember that’s the average. For every story you hear of someone who gets a no change audit, that means someone else is paying $11,000 in extra taxes.

Plus, there are hours of time and energy wasted.

So, what the answer? Avoid audits by audit proofing your return.

If you have a Sole Proprietorship, you have a 1 in 3 chance of being audited. If you have an S Corporation, you have a 1 in 100 chance of being audited.

Guess which one I have my company in?

Only the iteration of a tired cliche can demonstrate how much I agree with those sentiments:

An ounce of prevention is worth a pound of cure.

Diane is a CPA, the author of many tax articles and essays, and a frequent lecturer on a variety of tax subjects.

Here’s a quote from her website:

All of us have a responsibility to pay tax but none of us should pay more than our share.

The tax laws are complex and written for the rich. Most of us do not have access to the kind of information that will allow us to use these loopholes that all taxpayers are entitled to.

My personal goal as well as our goal at TaxLoopholes is to educate individuals and corporations on how to keep more of what they make.

Related Links

5 Tips for Preparing Form 1040, Schedule C

IRS Audit Checklist

IRS Collection Process

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