What to Do If the IRS Suspects You Have Unreported Income?
If you have received a substantial amount of money that you did not report to the Internal Revenue Service (IRS) and you believe that they might suspect that you have received these funds, chances are they will contact you. In a case like this, one can assume to not only pay the taxes on this unreported income, but also the penalties, interest, and late fees for neglecting to: a) Report it in the tax year it was received and b) Pay it on time. These late fees and penalties can add up to a significant amount of tax debt. The longer one waits to take care of this debt, the higher these additional fees can be.
Here are a few suggestions to take action on if you have unreported income:
Trace Your Income
If you have unreported income, the IRS will insist that you show some proof of it. Otherwise, they will have no other choice but to assume that you have acquired it illegally, which will bring on another set of problems that you don’t want.At any rate, the best place for you to gain this information is from your bank and/or from the person or institution from where you received these funds.
Go Back to the Source
Most businesses, institutions, and even entrepreneurs that render funds usually do so with traceable paperwork—at the very least a check. Even if the transaction is conducted with cash, there is usually an invoice to verify that a certain amount of funds were given to you. In an situation like this, it is most important to go back to the source from where you may have received your unreported income and ask them for some type of documentation that states they gave you a certain amount of money.
Refer to Your Bank Account
These days, many transactions are done with a debit card that is connected to your checking account. Banks are required to send all of their account holders a monthly summary of their bank transactions. Depending on the account holder’s preference, these statements can be mailed or emailed. If you are the type to keep your monthly bank statements, then you are in good shape. If not, there is still a solution: Log on to your bank account. There, you can usually pull up bank statements back up to a year. If the IRS is inquiring about a year that is unattainable through your online banking, then you will have to physically go to your bank and make a special request for this information.
Bank Statements will reveal 2 things:
- Purchases that may have been bought with the suspected unreported income.
- Possible deposits acquired from ‘under the table’ transactions.
Call the IRS before They Call You!
Success Tax Relief is in the business of reconciling any tax issues you may have with the IRS, including unreported income. Our company has acquired over 30 years experience working with CPA’s, tax attorneys, financial analyst, case coordinators, tax preparers and consultants. In other words, we can help you! Don’t wait until it’s too late, call us at 877-825-1179 or contact us online to schedule a consultation now.