One of the consistent areas that can cause the IRS to question your return is a discrepancy between your reported income and the information the agency has.
All those forms you receive showing income — i.e., your W-2 from work, a 1099-MISC or 1099-K reporting side income or 1099-INT showing taxable interest of $10 or more on a bank account — also go to the IRS.
And if you fail to report any of those earnings, you’ll hear from the IRS — the discrepancy will generate an automatic letter.
“The No. 1 thing that causes you to get a letter from the IRS is failing to report all your income,” Bibbo said.
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Even if you don’t receive an official income form for work you performed, you probably still need to let the IRS know about it: If your income (after expenses) from, say, a side gig is at least $400, you are required to report it and pay taxes on it.
And for the cryptocurrency investors out there, don’t forget you should be reporting your gains (and losses) on bitcoin and its siblings. The IRS has been beefing up its enforcement efforts in that area and cracking down on scofflaws.
“If you think you can get away with not reporting, you should know you’re probably going to get caught,” Bibbo said.
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