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Thread: IRS 'official" announcements

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    Default IRS 'official" announcements

    "Other IRS Initiatives

    Here's a quick summary of other major projects the IRS has on the front burner.

    Find unreported income. The IRS has developed a new computer program to identify returns most likely to have underreported income. (How will it do so? Nobody knows. It's proprietary government information.) In the past, IRS computers focused more on fingering returns most likely to have overstated deductions.

    Failing to report income can get you into a whole lot more trouble than puffing up your deductions a bit. Why? Because it's a very tough sell to claim you didn't realize that you have to report all your income to the IRS. In contrast, the rules for deductions are often so murky that even the most honest taxpayers can make mistakes."


    During the 2004 fiscal year, which ends in September for the government,
    the IRS audited approximately 195,200 high-income individuals (sic- high income defined as $100,000 or more in gross earnings). The audits hit 1.5% of all high income individuals and represented an increase of 40% over FY 2003.

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    Default Re: IRS 'official" announcements

    Good info, Melonie...you are a great resource for these ladies (and the occasional gentleman)!

    I have been reading many of your old posts on deductions (I am going to prepare a dancer's return this year and wanted to make sure I didn't miss any deductions for her) and you have been right in line the entire time. You are a bit more conservative than many people would be in their deductions, but it is better to be conservative than overly agressive!!!

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    Default Re: IRS 'official" announcements

    it is better to be conservative than overly agressive!!!
    Well, that's not necessarily the case ... provided that the dancer in question hasn't been previously audited !

    My 'conservativism' is partly based on the fact that my tax return also includes cash income, 1099 internet income, investment income, foreign income, extensive capitalized business depreciation deductions, and a high enough tax bracket to virtually guarantee that my tax return will be scrutinized by an IRS agent every year. By being conservative in regard to the gray areas I have avoided repeatedly being audited in detail.

    However, to be honest, for a dancer with a gross income in the third bracket or below (i.e. $60,000), she already has low enough audit risk factors because of the lower bracket that a few aggressive gray area deductions would probably not draw undue IRS attention.

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