I started doing my taxes for myself in 2010, and the months after filing were the most nerve racking months of my life. I fully expected to get a phone call from Uncle Sam asking for every receipt I owned in 2009. When people think of the IRS they think of a guy in a crisp white shirt and glasses, who takes pleasure in ruining people’s lives. I had to reach out to coworkers in the hospitality industry, as well as family and friends to get their thoughts on the IRS. Here were the key general statements I noticed.
- The general public thinks the IRS wants to audit you if you own a small business- When I started my business earlier this year I did a lot of research on taxes and what to do to prepare for filing next year. The biggest tip I got from the 20-30 websites I visited was to save a certain amount of income to pay to the IRS. I created a system that allowed me to track all of my expenses and income in one central place. A simple spreadsheet is all it takes, and keeping hard copies of receipts as a backup will be a huge help). Once tax time rolls around you will have everything you need!
- The IRS always gives out big refund checks- A refund check is not guaranteed if you don’t meet the necessary income requirements to back it up. A majority of the people I spoke to said they expected the IRS to give them a refund check based on how many kids they could claim as dependents, or how much they made during the calendar year. Some even went as far to say that they were looking to claim relatives to get an even bigger tax break! When I mentioned that it was illegal many simply stated that the government didn’t have enough time to follow up on the legitimacy of every single dependent year after year. We have all heard the saying “The only guarantees in life are death & taxes”, so why wouldn’t the IRS keep track of changes to your taxes each year? They are paid to thoroughly check every set of taxes filed in the country and to believe they won’t follow up on a discrepancy is foolish.
- If someone does your taxes for you incorrectly it’s not your fault- This line of thinking couldn’t be further from the truth. When you go to H&R Block, Jackson Hewitt, or any licensed individual, chances are high they have enough training to avoid any mistakes when filing. When you have a close friend do it; or someone that “does this all the time”, you have a good chance of a problem coming up, especially if you own a business. If a problem does occur the IRS has no idea that this individual filed your taxes for you, so why would they go after them? If someone does your taxes for you I recommend reviewing everything. With tax filing software, you can make sure everything in your review matches what the individual had to the exact dollar amount. If anything is off go back to them to see where the inconsistencies are, and come to an agreement on the next course of action.
To put it simply the IRS collects all the taxes for individuals and businesses each year. There isn’t some complex scheme explaining how the functions of this government department works, just a lot of math. Math that most of the general public hasn’t learned, or wants to learn. After doing my taxes in 2010 and not being called in for an audit, I realized I did something right. I was able to debunk the myths I had about the IRS and filing taxes, and avoided having to meet the guy in the crisp white shirt with glasses.
Darrelle Thompson enjoys writing about a variety of subjects, but he provides a unique perspective as an insider in the hospitality industry. You can read his other articles at www.darrellethompsonwriting.com. Darrelle loves sports, A&E shows, and spending time with his wife and 6 children in West Texas.