Preparing your taxes should be simple and relatively stress-free, right? Well, that’s not always the case – especially if you are part of the unlucky minority that gets audited by the IRS or other tax authority. The prospect of having to go through this process can be scary – but if you have the right tax audit insurance, it doesn’t have to be! Here’s why you need to make sure you’re covered in case of an audit and how you can get protected from a tax investigation with the right insurance policy.
Why Do People Fail to File Their Taxes?
We take our taxes for granted. In many countries, citizens have to pay taxes – and whether or not we get audited is left up to chance. However, in some parts of America, it’s mandatory for citizens to purchase tax audit insurance; otherwise, you can be penalised for non-compliance. Keep reading as we dive into tax investigation insurance and why you should buy it before filing your taxes.
What Does an IRS Audit Mean for Me?
When you receive notice that the IRS is auditing you, it’s an alarming and uncomfortable feeling. But it doesn’t have to be. If you know what to expect during your audit, then most of your anxiety will begin to subside; having an insurance policy that covers tax investigations can take care of much of what scares people about getting audited in the first place.
What can happen if I don’t file my taxes on time?
If you fail to file your tax return by due date, you could face serious tax evasion penalties, including fines and time in prison. Additionally, if you are audited and found guilty of intentional tax fraud—but not innocent neglect—you can be fined up or even serve jail time. An audit might also result in an additional IRS bill for back taxes that you may owe. The best way to guard against these situations is to invest in tax investigation insurance coverage.
What if I Make a Mistake in My Taxes? How Can I Fix It?
The IRS provides several ways to report mistakes in your taxes. If you make an error, you have three years to file an amended return to adjust your original tax return and fix any issues. After that time, you’ll need to apply for one of several hardship waivers offered by the IRS. Check out options before worrying about being audited or making a mistake when filing your taxes.
What are Other Reasons Why I Should Get Tax Protection Insurance?
Tax investigation insurance is meant to protect your business and personal assets in case of an audit or tax investigation. However, there are other reasons why you should consider adding it to your small business insurance policy. Your protection doesn’t stop at tax time; there are plenty of other instances where you could face penalties for under-reporting income or over-reporting expenses.