Tax lawyers will normally tell clients that deductions are a common reason why the IRS conducts an audit or looks to see if a person is committing tax fraud.
Washington, DC – Properly calculating deductions can be an important way for individuals and businesses to minimize their tax burden and save money. However, deductions also need to be accounted for and used appropriately when filing, otherwise the IRS may become concerned and conduct an audit or take other measures. Lawyers are available to provide specific advice about deductions and other matters related to taxation to help their clients.
What are tax deductions?
A deduction is essentially some kind of cost paid by the person or business that can be subtracted from the total amount that the person owes the government. In some cases, a person can choose a standard deduction that will help save some money, otherwise they will need to list each individual item as a deduction. Usually, the filing person or entity will be advised by District of Columbia tax lawyers to choose the option that saves them more money. Common deductions usually include business expenses or other things that a person or company needs to buy in order to keep working and earning money. Donations to various charities are also used as deductions.
What are some deductions that are not as obvious?
There are certain things that can be deducted that many people miss when they are filing their taxes. These include certain kinds of medical costs, interest on student loans or mortgages, local taxes, money put into an IRA, money lost through investing, and expenses sustained by self employed people for certain costs. Washington DC tax lawyers and other tax professionals usually ask clients a few specific questions to get answers related to how they should claim deductions when filing, and whether the combination of their itemized deductions would save more money than the standard deduction.
Getting into trouble with deductions
Tax lawyers will normally tell clients that deductions are a common reason why the IRS conducts an audit or looks to see if a person is committing tax fraud. Some people and businesses will try to simply claim a very large amount on their deductions and hope that the IRS does not notice. For them, the gamble may result in very large savings on their taxes. However, if this is done intentionally and fraudulently, it can result in the federal government filing criminal charges related to tax evasion. This is why deductions need to be handled properly.
Investments and deductions
People who have extensive investments in things like real estate and other forms of property, retirement accounts, trusts, and stocks or bonds should get advice about potential deductions and how to manage their tax burdens. Estate planning lawyers regularly handle tax issues related to trusts, wills, and other kinds of inheritance.
Learning more about tax law
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