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As the IRS receives a massive funding boost aimed at improving enforcement efforts and closing the “tax gap,” many taxpayers may be wondering how to avoid getting audited. While it is impossible to completely eliminate the chances of being audited, there are practical steps you can take to lessen your exposure.

The most crucial step is to avoid making common mistakes that are frequently flagged by IRS computers, such as filing or paying taxes late or not reporting all income that has been reported to the IRS by others. Additionally, taxpayers should avoid reporting losses from business activities that the IRS might view as hobbies and should provide specific information about their deductions.

Other actions to avoid include using the same annual figures repeatedly and using all perfectly round numbers in your tax return. Taking these precautions can help reduce the likelihood of being selected for an audit by the IRS.

As the year progresses, it’s important to start thinking about tax planning to avoid any unpleasant surprises when tax season arrives. There are a number of mid-year tax planning strategies that can help taxpayers save money and increase their retirement fund.

One of the first things to consider is reviewing tax withholdings to ensure that everything is up to date and on track for the coming year. Additionally, increasing 401K contributions is a great way to reduce total adjusted gross income and increase retirement savings. It may also be worth considering Roth IRA conversions, which can take advantage of the current stock market downturn to save on taxes.

Taxpayers can also consider tax-loss harvesting, which involves using losses to offset profits and reduce tax liabilities. By taking these steps, taxpayers can stay organized and be better prepared for the upcoming tax season.

Cryptocurrency has been making waves in the financial world for several years now and has only been gaining popularity among individuals and corporations. While one of the biggest appeals of using cryptocurrencies is the ability to remain anonymous through private and secure transactions, this will no longer be the case after December 31st, 2022.

With the evolving world of crypto, tax rules are also changing rapidly, and new reporting requirements for cryptocurrency transactions will go into effect from the 2023 tax year. This means that potentially taxable digital asset transactions made by cryptocurrency users will be reported to the IRS by outside parties, similar to third-party reporting required for stocks. Businesses must also begin reporting whenever they receive more than $10,000 of cryptocurrency in a single transaction to minimize money laundering.

While the news that cryptocurrency is here to stay may be great for some, the loss of anonymity also presents an obstacle for those who wish to keep their transactions private or have not met their tax obligations. It is expected that users will now be asked to provide an array of personal information when opening a digital wallet, which was likely not required in the past.