New TurboTax Helps You Fly Under IRS Radar
Who doesn't dread opening a letter from the Internal Revenue Service? If you know it's not a refund check, it probably means an audit. Even if you're the most honest taxpayer in the country, you don't want to be in a disagreement with the IRS.
The IRS is getting tougher. In 2007, the number of individual returns that were audited increased by 7% to 1,384,563 -- the largest number since 1998.
Wealthy Americans, not surprisingly, felt much of that change. Audits of individuals with incomes over $200,000 reached 113,105 last year -- up a full 29% from the previous year. Audits of people who reported more than $100,000 in income increased nearly 14%.
That's what makes the latest announcement from TurboTax so appealing. This year, the popular software program has a new feature called the "Audit Risk Meter," which is designed to help you lessen the chance of your return being chosen for this extra scrutiny. Of course, the IRS doesn't announce the key items that it uses to choose a tax return for an audit. But using the information from the many tax professionals who create its software, TurboTax (INTU) has identified many deductions and other common reasons that trigger an IRS audit.
Preventing an AuditThe program flags items -- or combinations of deductions -- that might be likely to provoke an audit. It gives an explanation of why this is such a hot button and advises you to consider alternatives or to keep backup data to justify the deduction. The audit risk meter shows you whether you're in the red zone, and more likely to be audited, or in the green, so you can heave a sigh of relief, sign your return and mail it or file electronically. Some key items that trigger audits:
Dealing With an AuditYou probably use tax software because you don't want to pay a professional to do your return. Then who do you turn to when that ominous IRS letter arrives? TurboTax deals with that issue, too, with a downloadable feature called Audit Support Center, which you'll store on your computer, just in case, as you prepare your tax return. It's specifically designed to take the panic out of responding to that dreaded summons. The Audit Support Center recognizes that when you open the IRS letter, your mind goes into shock. So on the first page you see a picture of the four different IRS sample letters you might receive, representing the four basic types of audits. Then as you click on the form that represents the document you're holding in your shaky hand, it guides you on the appropriate response.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV