Wednesday, April 14, 2010

Tax tips for next year, and how to cope with an audit

My new series on family and finances has made its debut over at Yahoo!'s Shine, and the first installment is just in time for tax day: How to get organized for next year, and how to cope with an audit.

Here's an excerpt:

Ah, spring. It's when an adult's fancies turn to thoughts of... paying her taxes.

And, possibly, panic over the idea of being audited.

Taxes are due April 15. If you're still staring at a pile of 1040s and W-2s, time to get cracking. If you've already filed them, pat yourself on the back, and then start getting ready for next year. Yes, really. Yes, now. Whether you do your taxes yourself or hire a professional, you can make filing your 2010 returns infinitely easier by doing a few simple things....[More]
If you do happen to get a love letter from the IRS in the mail, you'll want to make sure you do these seven things (and click through to Yahoo! for more details):

1. Don't panic, but don't ignore the letter, either. Read IRS Publication 1, which explains your rights under the Taxpayers' Bill of Rights, and do your research -- there are plenty of free IRS publications available at

2. Your best defense isn't a good offense -- it's justification. Have detailed records handy (and keep in mind that you are allowed to reconstruct those records if you've lost track of them).

3. If possible, avoid meeting at your home. Even better: Have your tax preparer represent you -- or hire one if you did your own taxes that year -- and hold the meeting at his or her office.

4. Bring only the documents that the IRS has requested. There is no need to explain items that they haven't asked you about.

5. Don't get emotional. The IRS certainly won't be. This isn't about you, this is about your money.

6. Don't sign anything if you can help it. Keep an eye out for Form 872; it extends the amount of time in which the IRS can assess additional tax on your return.

7. Don't fight the figures. Fight the tax issues -- what counts as a deduction, for instance -- instead.

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