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Having lived through my parents being audited multiple times I am definitely afraid of the IRS boogey man. Merely dealing with an audit (even if everything you

Having lived through my parents being audited multiple times I am definitely afraid of the IRS boogey man. Merely dealing with an audit (even if everything you id was correct and above board) can be extremely stressful and time consuming. My parents also thought their CPA was really good an knew what they were doing. Turns out that even CPAs screw up sometimes. :-)

dcolkitt 6y ago
I don't know how long ago this was, but in the past couple decades the likelihood of a regular Joe getting audited has plummeted. IRS enforcement has pretty much been gutted by Congress. For everyone but high earners, it all comes down to automated checks that run at file time. If you don't have any obvious flags (e.g. not reporting income that was on a W2), then the IRS doesn't have time for you.
- andrewflnr 6y ago
  That's how it should be.
BeetleB 6y ago
I've dealt with the IRS. It was a major pain. Ridiculous pain. They were contesting some education credits some years after graduation. Showed proof of payments to the university, but they responded with "Well how do we know you were paying for education - you could have been paying for things like parking?" They kept saying "Send us this doc and you'll be good." We'd get the doc, send it to them, and they'd say it's not enough. Called the university. They said they'd never heard the IRS contest the form that universities provide (1098 or whatever it is). I had to beg them to find my actual bill for that year, so I could show them that what I paid match what was billed. Finally the IRS relented. Jokes on them, though. I found some unused deductions, amended my tax form, and got back an additional $400. Having said all that, I still do all my taxes myself. Neither Turbotax nor a CPA would have spared me this headache - they would have filed it exactly as I did - just slap on the form the university provides. My wife used to use a CPA in the past - relatively cheap ($150 for both federal and state). I found issues with his work - he didn't take as many deductions as he could. I amended and got back extra money. He also messed something up which the IRS (rightly) contested. We contacted the CPA so he could fix it and he went AWOL. We had to deal with it. If your financial situation doesn't change from year to year, I suggest paying a CPA once to do your taxes, figure out everything he/she did, and just do it yourself next year.
- deleted 6y ago
  [deleted]
- nostrademons 6y ago
  Also had to deal with the IRS over education credits and capital gains. It is a pain, and can be stressful, but ultimately I found that the IRS was fair, bureaucratic, and professional. I think that the most important thing to remember when dealing with any government or financial institution is to keep paper records of everything. For our education credit dispute, we had my wife's transcript and receipt for tuition paid in the tax folder; we sent that in and the matter was closed. Same goes for capital gains: it's really handy to have detailed records of the cost basis for anything you sell. Same goes for identity theft, bank fraud, stolen credit cards, contractors that don't do what you pay them to do, etc. Know what you have agreed to pay, keep a paper trail of it, hold up your end of the bargain, and then insist anyone you do business with hold up theirs.
  - BeetleB 6y ago
    Well, I had a record that I had paid the university, just not the receipt that said that the payment was for tuition and not parking. I generally do keep paper records. For this case, both the university and a tax accountant told me what I had submitted is all that is needed. There's a reason the university gives you a tax form every year. Saying I should keep more records is like the IRS coming to you and not accepting your employer's W-2 form and wanting additional proof of your wages. Did you happen to save your biweekly payslips? For standard deductions/credits (of which education is a common one), I do think it is the responsibility of the IRS to come up with a simple system to show it, like they already do for the W-2. The tax statement the university provides should suffice - what else is it for? As for professionalism: They were calm and courteous, but I do not think being told "If you can show X it will be sufficient", and then not accepting X when I provide it to them is professional. This happened twice for the education credit issue. X wasn't some vague general idea, but a very specific document. They literally said "If you can show a bank statement showing payments to the university that will be enough" and then refused to accept it when I provided it to them (switching to "Yes, but how do we know it wasn't for parking?"). It should have been obvious at the outset that the bank statement would not have this information.

dcolkitt 6y ago

I don't know how long ago this was, but in the past couple decades the likelihood of a regular Joe getting audited has plummeted. IRS enforcement has pretty much been gutted by Congress. For everyone but high earners, it all comes down to automated checks that run at file time. If you don't have any obvious flags (e.g. not reporting income that was on a W2), then the IRS doesn't have time for you.

andrewflnr 6y ago
That's how it should be.

BeetleB 6y ago

I've dealt with the IRS. It was a major pain. Ridiculous pain. They were contesting some education credits some years after graduation. Showed proof of payments to the university, but they responded with "Well how do we know you were paying for education - you could have been paying for things like parking?" They kept saying "Send us this doc and you'll be good." We'd get the doc, send it to them, and they'd say it's not enough. Called the university. They said they'd never heard the IRS contest the form that universities provide (1098 or whatever it is). I had to beg them to find my actual bill for that year, so I could show them that what I paid match what was billed. Finally the IRS relented. Jokes on them, though. I found some unused deductions, amended my tax form, and got back an additional $400. Having said all that, I still do all my taxes myself. Neither Turbotax nor a CPA would have spared me this headache - they would have filed it exactly as I did - just slap on the form the university provides. My wife used to use a CPA in the past - relatively cheap ($150 for both federal and state). I found issues with his work - he didn't take as many deductions as he could. I amended and got back extra money. He also messed something up which the IRS (rightly) contested. We contacted the CPA so he could fix it and he went AWOL. We had to deal with it. If your financial situation doesn't change from year to year, I suggest paying a CPA once to do your taxes, figure out everything he/she did, and just do it yourself next year.

deleted 6y ago
[deleted]
nostrademons 6y ago
Also had to deal with the IRS over education credits and capital gains. It is a pain, and can be stressful, but ultimately I found that the IRS was fair, bureaucratic, and professional. I think that the most important thing to remember when dealing with any government or financial institution is to keep paper records of everything. For our education credit dispute, we had my wife's transcript and receipt for tuition paid in the tax folder; we sent that in and the matter was closed. Same goes for capital gains: it's really handy to have detailed records of the cost basis for anything you sell. Same goes for identity theft, bank fraud, stolen credit cards, contractors that don't do what you pay them to do, etc. Know what you have agreed to pay, keep a paper trail of it, hold up your end of the bargain, and then insist anyone you do business with hold up theirs.
- BeetleB 6y ago
  Well, I had a record that I had paid the university, just not the receipt that said that the payment was for tuition and not parking. I generally do keep paper records. For this case, both the university and a tax accountant told me what I had submitted is all that is needed. There's a reason the university gives you a tax form every year. Saying I should keep more records is like the IRS coming to you and not accepting your employer's W-2 form and wanting additional proof of your wages. Did you happen to save your biweekly payslips? For standard deductions/credits (of which education is a common one), I do think it is the responsibility of the IRS to come up with a simple system to show it, like they already do for the W-2. The tax statement the university provides should suffice - what else is it for? As for professionalism: They were calm and courteous, but I do not think being told "If you can show X it will be sufficient", and then not accepting X when I provide it to them is professional. This happened twice for the education credit issue. X wasn't some vague general idea, but a very specific document. They literally said "If you can show a bank statement showing payments to the university that will be enough" and then refused to accept it when I provided it to them (switching to "Yes, but how do we know it wasn't for parking?"). It should have been obvious at the outset that the bank statement would not have this information.