The last thing you want is to get in trouble with the IRS—but many find themselves in the hot seat every year, having failed to accurately report all of their income. If the IRS finds a discrepancy between your records and the payment information on file, they will first send you a CP2000 Notice, giving you a chance to prove there has been a mistake and correct the situation. Penalties—from civil to criminal, depending on the situation—may await the taxpayer who fails to report his or her income accurately.
In addition, the IRS is getting much better at catching misreported returns, thanks to electronic means of tracking income and comparing forms 1099-K (Payment Card and Third Party Network Transactions) to business returns. The most likely taxpayers to underreport are high-income individuals and small businesses, so if you fall into either of those categories, you may also be more … Read More