IRS Audit

[mntbikr15]

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The IRS audits apx. 2% of all returns submitted, and of those 2%, about 90% of that is from people with 'suspicious transactions' (i.e. over 10% of your income being donated to charity or gifted). It doesn't matter how much money you make, as long as you have to file a return. The key to remember is to ALWAYS document every transaction you make with a 3rd party (neteller, etc.) as well as document any large purchases you make. As long as you can account for your income within a reasonable amount, there's nothing to worry about.

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how do you document neteller, can you just get a lump of all your transactions with them over the year?

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Its all on the site.....Ive been using them for years though and have so many(prob > 1000) transactions with them that I would shoot myself if I had to try and sort it all out.

[danzasmack]

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Yeah it's messed up too because if you don't pay for 2006, it's not like once 2007 is over you're in the clear.

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really?

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well I work with tax data. I just got the 2004 income tax file a few months back. I'm REALLY not sure about personal income tax as I don't do auditing stuff, but I do know that corporations would be on like a 2-3 year delay.

[Barretboy]

By big purchases I mean anything probably over 1-2% of your yearly income (TVs, furniture, etc.) You need to have original receipts from those purchases. An audit is simply about documentation. As long as you can document what you put down on your return one way or another (reciept, notarized balance sheet of transactions, etc.) there's nothing to worry about. They dont care about the 60 bucks you spent on a video game.

[Sciolist]

It was my understand that it's now IRS policy to audit more people with lower amounts of money being moved around, instead of going after rich people.

I had some UK tax office ask me where my money came from, except I didn't open the letter for 6 months (I ignore my non-bills mail), and that was 3 years ago and I haven't heard since. Hurrah for the incompetent beaurcoracies!

[orestto]

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I'm not at all about this as I live in Mexico.

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[Barretboy]

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he mentioned that he got alot of deductions to pay low taxes.. isnt claiming alot of deductions (especially when they relate to playing poker) the best way to get audited?

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Claiming a big number of deductions (over 15-20% of yearly income) is another one of those 'flags' I talked about before that the IRS looks for. It's a good way to get audited. But as long as the deductions are legit, no reason to worry.

[Split Suit]

for those of u that seem to kno something about this stuff, i was wondering what i would b filing this yr. i am in college, no job on paper. i play poker to make money, and have everything documented either on Neteller, or thru bank transfers. its not a crazy ammount, but being im makin money, and have no paper job to hide behind, how do i handle this? (or shud i just file my taxxes with nothing on it?)

[Barretboy]

You should file regardless of what you make; However, you will only have to pay taxes if you make more than $7,550 (in 2006). You'll have to fill out a 1040 (you can get it on www.irs.gov). All the instructions are on that website on how to fill it out.

[BigBuffet]

Put what you made along with any poker related expenses on a Schedule C. Transfer the net profit to whichever 1040 form you use and pay the tax.

Remember, Al Capone got away with killing many people but went up for tax evasion...

PS. I was audited in 2002 for 1999 stock trades. Brought in all the papers and they made copies. A few weeks later I received a letter saying they accepted my return as I had submitted it. No big deal.

[Split Suit]

thnx guys. good look