A surprising effect could be caused by the Inflation Reduction Act.
Note that none of this is official yet, it recently moved forward in Congress and still needs to be passed.
Surprise! The Inflation Reduction Act is here!
If you read the actual 755-page manuscript (yes, I had the pleasure), you would know that the bill includes some tax changes that won’t affect most of us unless your business is doing more than $1 billion each year…
Since part of the plan is to tax corporations at a minimum of 15%...
But here is the big part for normal people like us, the IRS has a new plan to increase revenue.
How are they going to do that? It’s going to invest in “enforcement” AKA MORE audits
There is expected to be about a 3% audit rate this year…Not a lot, right?
Well, compared to previous averages of just under 1%, that’s actually 3x increase!
So, how can you be ready in case you get selected for an audit?
Well, first of all, talk to a tax pro to get everything in order, which means getting together your last 3 years of tax returns (the standard statute of limitations for them) and having your books organized.
And in the unfortunate event, it does happen, you can get it over with as painlessly as possible just by having everything you need on hand.
For a normal employee who receives a W2 and might have a few 1099s, an audit is pretty straightforward.
However, if you’re a small business owner, for an audit you would need the following documents to come out in one piece on an audit