More IRS Audits Planned

Nobody likes being audited by the IRS, although the chances of being audited are now actually higher as there are more of them planned.

For those filing who had an income of over $200,000, IRS audits were increased by around 34 percent between 2010 and 2011. Despite this hefty increase, audit rates in general are still low, regardless of income amount.

For those earning over $200,000, almost 4 percent were audited for the 2011 year, and for those earning over a million dollars, audits were increased by 24 percent, with around 12.5 percent of those taxpayers being audited. The Washington Post, The Wall Street Journal and Bloomberg all noticed this and commented on it.

In actuality, you have a two percent chance of being audited, although the Treasury Department still requires tax advisers and preparers to assume that all returns will be audited.

Of course, the chance of being audited affects the advice given, and if a tax preparer tells you that something will probably be accepted, he or she has to assume the return may be audited. Although there is no sure way to avoid being audited, take a look at our 10 ways to audit proof your return.

Various things can trigger an audit, in addition to your actual income, including which items are claimed, your deductions and any tax credits. If you claimed the earned income tax credit (EITC) you generally have more chance of being audited.

A large income alone draws attention, but does not necessarily mean that you will be audited. However, for those of us who are lucky enough to be very wealthy, the IRS actually has a special task frce to handle those tax returns.

3 Ways in which you can accelerate debt reduction

If you are under severe debts and do not know what to do, then you should understand that debt reduction should be your primary focus. This is because debt reduction can help you reduce stress and levels and leaves you with more cash that you can save or utilize in investments to make money.

Some of the ways in which you can reduce your debts and also make sure that you save are as follows.

1. Plan a budget to manage finances: It is most essential for you to formulate a budget that you can use by which you can assess your financial condition. The budget that you formulate should list all your expenses and also your monthly income. It should have categories to tell you how much you spend and where you spend it. This helps you in getting a clear picture of your finances and also makes you aware about where you are spending and how much you are spending. You must also make provisions in your budget so that you can save a certain amount every month. You must subtract the total expenses from the total income and the amount that you get is to be used to pay off your debts. If you feel that this amount is not sufficient, then you must try to reduce your expenses or increase your income. The budget keeps you motivated and helps in debt reduction as well as savings.

2. Do not spend on what you do not need: It is important for you to know that when you are paying off your debts you are to try and spend as less as possible. This is to be done so that you can save enough to pay off your debts. Every month make a list of the things that you really need and buy only those things. Things that you desire but do not need must be avoided. The best way to refrain yourself form making such purchases is to wait. If you want to buy something that is very expensive wait for a few days to make the purchase. You will gradually realize that the desire to possess it has left you. This will save you a lot of money and you will be able to pay off your debts with ease. After you have finished paying your debts, if you still practice this, you will have enough left for investing and making money.

3. Do not add up more debt: You should try not to add more debt to your existing debt. This is because when you are already paying off debts then it is best that you do not take on new debts. If you take on new debts, then you will have to pay a certain amount of money towards it. This will lead to a shortfall in the amount that you have to pay off towards your current debts. In order to avoid that and accelerate debt reduction you must not take on further debt. This will also help you save and make more money in future.

These are a few ways in which you can tread the path of debt reduction and opt for a new way life where you have enough to save and enough to invest.