What the IRS Doesn’t Want You to Know

You Probably Won’t Be Audited
– The IRS’s budget has received multiple budget cuts
* Less personnel (including auditors) means a decline in audit rates
* This decreasing trend will likely continue

– Less than 1% of taxpayers are audited

– The IRS’s priorities remain the same and ethical financial practices are still advised

– However, don’t hesitate to claim all legitimate deductions

The IRS Might Owe You
– All taxpayers are aware of late payment penalties

– If the IRS is late giving you your tax refund, they owe you interest
* After 45 days, it owes you interest every day afterwards

– The IRS’s interest rated changes quarterly
* 4% for the first quarter of 2017

Charitable Distributions Instead of RMDs
– After age 70 ½, the IRS requires a minimum withdrawal from tax-deferred accounts

– Because these distributions are taxed as income, this can cause tax complications

– Avoid income tax by donating to charity instead of keeping it

– The distribution must go directly to charity however

Avoid Early Withdrawal Penalties from Retirement Funds
– A penalty tax is incurred from withdrawing before age 59 ½

– The exception is the Substantially Equal Periodic Payment (SEPP) program
* If you take exactly the same amount every year, you won’t have to pay
* The amount is calculated by amount in accounts and life expectancy tables