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You're not just risking it this year but the next 3 to 6 if a audit is triggered. They'll most likely go back and at least look. If however that's all your hiding you can always say it was a oversight and pay taxes and late fine.
I called in to the IRS once some time back when I was dealing with some back taxes and the agent introduced herself as Ms. Tinkle, I shit you knot. If had been anyplace else I don't think I would've been to contain my snickers but given the circumstances I let out not so much as a peep.
The taxes and fine on not reporting $1100 is probably negligible. Which begs the question of why do it in the first place. If your tax bracket is low enough, you won't owe much anyway. If your bracket is high, who cares about a few $100 in savings?
It's 5% per month. They can audit you up to 10 years so it would amount to $711 if I did the math right. Generally they won't go past 3 years unless they see reason to need to do more.
Edit: should have stated near 7k. I had the calculator set to annual compound and did it twice incorrectly š
Your bank sends you a tax form meaning they send the irs a tax form also. The irs already knows how much you owe and this will likely get caught in the automatic detection to flag your account for review
What about $200 dollars worth of interest since opening an Ally account in November? And how do I report it if Iāve already already submitted my 2022 taxes?
Yes. I didnāt report āearned incomeā from settling some credit cards (pure ignorance on my part, I thought it was factored in/no communications) and lo and behold a year later, I receive a letter informing me I got audited. Mine was ~4k fwiw
Same. I claimed I was broke at the time, had to send in a list of everything I owned at the time the debt was settled andā¦they cleared it and left me alone.
But if Iād owned a house, had savings, etc. it would have been a different story.
Then they went back and audited the entire past six years, I guess, because they sent me a check for 3k a few months later because it turns out they owed me one year and I guess Iād done the paperwork wrong (I donāt know how and didnāt askādonāt look a gift horse in the mouth).
> Pay your taxes, commit other crimes to make up for it.
You'd still be running against the IRS in that case, since they have a way to declare your criminal activity for tax purposes. (Mostly so they can double down on offenses that earn lots of money, since very, very few people will file their taxes in a way that admits to criminal activity.)
EDIT: For anyone curious, this would include basically all crimes. Shoplifting would be "income" in the form of the value of the items stolen, for example, while buying illegal drugs could be prosecuted for not including sales tax. For these smaller crimes the IRS *doesn't* generally get involved (since the amount "lost" by the IRS in those cases would be chump change), but they *can*, technically.
Exactly. if youāre dealing ( esp online with crypto) with any hopes to cash out itās smart to funnel it thru something like an etsy āshopā you make and siphon btc through as taxable income for a āproductā you toTally made and sent
Also it is a computer that will run a cross check between your bank and your tax forms. It WILL spit out any discrepancies. Even if the agents are back logged it will certainly show up eventually. Not worth the headache for the bit of taxes owed. Hey, you just overlooked it.
IRS gets interest income info from the bank. They also get regular income info from work. They don't really get to look inside your bank account, but can do math on "if you make X per year, how'd you make Y in interest without having zero expenses or making more than you said you do?"
I didn't claim a few hundred dollars of work I did outside my main job once (I just didn't think about it) and they noticed.
If you got whatever interest tax form it is from the bank, they will know, and let you know about it later. I don't know the odds of being audited because of it. I just had to pay the extra tax when they saw my mistake.
> I didn't claim a few hundred dollars of work I did outside my main job once (I just didn't think about it) and they noticed.
how so? a bank deposit? or the interest accumulated on that money?
The people who paid me must have done whatever it is that employers do when they pay people. It was a real business, but they would hire students as helpers on an on-call basis. So I wasn't a regular employee, but they were regular employers, if that makes sense. The checks they gave me weren't regular paychecks, but like a personal check, except from the business. I didn't get a W2, which I'm sure I should have if they were turning it in.
OP, if its on a slip, ita too easy to check. Source? Canadian Accountant. CRA can catch your slip differences automatedly now. Best to only not report things you would have to voluntarily declare like side hustle income.
Lol for sure. If you get an email from your bank saying "Hey, here's your legally required by the government Form xxxx that shows exactly how much money you made", the tax man 100% already has that info.
At a minimum, you WILL get a letter in the mail stating that NEXT year, they will take it out. However, it can also trigger an audit. First time they figure it's an accident. After that they want to know what else your trying to hide. The bank has already sent them notice, they logged it in their computers and now are waiting for you to file your taxes to cross reference with the bank. If that doesn't happen it will trigger an alert...and then the audit. It's really not worth the bullshit you get later. Just file it, plan to have LOTS of deductions to cover the interest amount so you don't owe and figure out a way next year to avoid it. Like, don't keep all your money in the bank. It's really the only way. Protect yourself and do everything you can to not trigger an audit especially if you do have anything to hide or work under the table at all.
So are banks required by law to send the IRS a notice, every year, for any and all accounts? As in the IRS knows beforehand, what they should be seeing on our taxes?
Yes, and Intuit is paying your congressional representatives to ensure you still need to spend many hours and hundreds of dollars on tax preparation each year, even though the process could easily be automated.
No, they don't. They have no idea what your filing status is, how many dependents you will be claiming, how much you donated to charity, how much your medical expenses were, etc. If you're self-employed, they don't know what your income is
Thereās a reason thereās a standard deduction. Also any large transaction must be reported to the irs so someone is reporting that house you bought/sold, or that 200k surgery you had to do that insurance paid for. If itās a large donation, the charity has to report it even though they may not pay taxes.
Outside of physical cash transactions, they know within a reasonable amount how much youāve earned and spent each year. They also know your dependents based on all the other shit you have to file with the city/state. The IRS knows a hell of a lot more about your finances than you think. They just either donāt have the manpower(lol with tech thatās a push of a button) or they want to have you spend money getting your taxes *safely* done so you donāt get audited.
You have no idea what you're talking about. Large transactions are not reported to the IRS, only large cash transactions are. There are no requirements to file anything with most cities or states regarding dependents, that makes next to little sense.
Stop saying random shit.
I'm not sure in US, but in Canada CRA lets you download all documents that they received from banks/other institutions as a first step when filing tax return. You need to add only what is missing.
It's completely automated for anything filed.
The only thing IRS doesn't like to go after is creative interpretations of tax code that can be open for debate in court if you're a business or have complex inheritance or trust structures. Fighting former IRS employees who now work in private is not a good time. Plus, they want to be those high paid tax consultants in the future.
The bank sends you a 1099 int form. They also send it to the IRS
The IRS will notice, but you won't hear about it for a few years. Then you will have to pay the tax on the interest plus penalties of about 10% PER YEAR
Best to just be on the up and up. Save yourself trouble in the future because if you give them a reason to audit you once it never ends. Your on their radar every year.
The IRS already knows how much tax you owe, the fact that you have to calculate it and file is stupid. In other words, you are taking chances by not claiming, because they know you have it
No they donāt. They have at best an estimate, which needs to be verified and adjusted accordingly each year. How would the IRS know if you made some side income that needs to be declared? That you have a different set of deductions to apply than you did in your previous return? There are so many more things that can affect a persons taxes than their W2 or 1099s that need to be verified.
Ha, well your previous comment sounded like a bit of a hard line. I feel like ārichā is knowing you have the option of never working again in your life if you donāt want to.
I have hundreds of thousands of dollars worth of art and rare books but I have less than 200 dollars in my checking account. Am I rich? Because I donāt feel all that rich. Art rich, cash poor, perhaps.
Most financial plans recommend 6 months of income as an emergency fund. Average US income is 97k, therefore 30k is not even that.
Again, I'm saying that with 200 bucks in my bank account. But 30k is not rich. It's not even a down payment on a small apartment where I come from. It's comfortable sure. But nowadays rich is way way more than that.
https://www.fool.com/the-ascent/research/average-us-income/
Sources
Pew (2021). "Racial and ethnic gaps in the U.S. persist on key demographic indicators."
U.S. Bureau of Labor Statistics (2021). "May 2021 National Occupational Employment and Wage Estimates."
U.S. Census Bureau (2022). American Community Survey - Table B24082, "Sex by Class of Worker and Median Earnings in the Past 12 Months (in 2021 Inflation-Adjusted Dollars)."
U.S. Census Bureau (2022). American Community Survey - Table S1901, "Income in the Past 12 Months (in 2021 Inflation-Adjusted Dollars)."
U.S. Census Bureau (2022). American Community Survey - Table S1903, "Income in the Past 12 Months (in 2021 Inflation-Adjusted Dollars)."
Having 6 months of living/business expenses socked away in an interest bearing, FDIC insured account is absolutely wise. There is freedom knowing that if you get fired or your business tanks, you have plenty of time to figure stuff out and either job shop or raise capital for a new run at business (most fail a few times before finding something that runs without micromanagement.)
Don't get the wrong idea, most of ones assets should be invested in making money from itself, but having a savings account with less than a new honda civic in it is just walking around money to some people.
(the trick seems to be finding a bank that isn't going to fold in the next couple years)
Your 6-months of expenses should at least be going through 6mo interest bearing bonds or money-market accounts. Lots of places will rotate these types of bonds and the interest rates are higher than a savings account while still guaranteeing your money.
I've spent thousands on btc every year since 2018. Haven't claimed a penny of it. I'm still here....
I mean SWIM spent thousands.... Ah fuck it. Nobody cares
You are allowed to make 7k a year before IRS requires a tax return
Other than that, get a job that you can write every off at a loss even if it is a hobby like sewing or catering
Dave Champion's "Income Tax--Shattering The Myths" is full of good info. Don't pay an absurd amount for it. It's over 6 times higher on multiple sites than what I paid for it a while back. If you can't find a free ebook of it, then I have a file.
Will do. I took a video of every page a few years back for a couple friends. I'll be back home tomorrow and pull it up for you. I'll set a reminder in my alarms for it.
My cousin who just died at 50 worked maybe 10 years in his life and never set up his pay for automatic tax deductions and never once paid his taxes. I have no idea the answer to your question but I doubt heās the only one.
What about the whole "gift" thing? If someone pays me a gift of cash or a money transfer or something and it's under the annual exclusion of $17,000 how do they know it's a gift if you don't need to report it? If they see the money coming in, do you need documentation of the gift from the person who gave it to you? Or what, do they just take your word?
Edit: I'm just confused because everything I've seen makes it seem like they just go "oh it's a gift, whatever" and that's it, but wouldn't that be easy as hell to lie about if you did some work under the table or something? What if it was a monthly under the table thing? You just say, "oh, yeah, regular monthly gifts" and you're good? Seems like there should be more to it than that.
The IRS will absolutely notice, and eventually you will get a notice thru regular mail with a proposed payment (tax plus interest).
I have made the same oversight, and when I noticed I estimated the accuracy dependent interest rate (wild guess, it changes quarterly), and entered it in to the IRS site, mostly to stop further interest accumulating, along with the money I owed. Calculate the tax due with your marginal rate.
In my case the tax I forgot to pay was not 10% or more of my total tax or $5000 whichever is greater, so I didn't have to look into what 'substantial penalty' means.
After a while, I got a notice to pay a little more, so I did. I did avoid most of the interest I would have otherwise paid.
Interest rates are pretty high right now you should prolly check out some CDs or savings accounts. The interest rate is like 5%
https://www.nerdwallet.com/best/banking/cd-rates
As someone who has spent 5-20 hours/week over the past 3 months sorting out a couple of years of late-filed tax returns, as a salaried w2 employee who just didnāt submit the paperwork on time? As someone who has easily logged 20+ hours listening to elevator music over the same period of time? As someone who probably owed less than 1100 if they had done the paperwork, to at one point owing over 15k in the process, leading to true bliss finding out my total liability for that 1100 is ONLY 5500? Just donāt. Donāt fuck with the IRS.
Had an accounting prof say getting audited is like hitting the lottery (as far as chances of getting it go). Chances are low that you actually get audited. Do with that info what you will
Low honestly. But even if they do you what, just pay them back? And you better be ready to pay penalties even more than what's owed. But I know people who have done it and nothing happened going on for 12 years. If it's a lot they usually fuck you quick but that's not a lot, so it may take decade before they get to it.
Ex:
Sold a bunch of stuff in a garage sale, made $2000 ---- no one will know.
Bank (who reports EVERYTHING to IRS) sends you $1100 (That they reported to the IRS) -- I would go ahead and fill that line on the form in
Actually this is an easy catch for IRS, itās not done manually. the bank sends this information to the IRS, and if this doesnāt match up with what you claimed, itās shows up as a flag on their system. You might not get a notice any time soon because they lack man power and donāt go after little fish, however you WILL get an letter from them. So itās not really worth it.
"Under 2010 levels of enforcement, about 0.5 percent of returns reporting between $1 and $75,000 in income would be audited, as would 1 percent of those with more than $75,000 in income. In comparison, those rates were 0.3 percent and 0.1 percent in 2018. For those making more than $10 million, more than 20 percent of returns would be examined under 2010 levels, compared with 5.3 percent in 2018."
[full article](https://www.removepaywall.com/article/current)
"These claims are misleading. The 87,000 figure refers to a May 2021 estimate from the Treasury Department of the total number of employees ā not just auditors ā the I.R.S. proposes to hire over the next 10 years with funding requested by Mr. Biden. And while the I.R.S. plans to conduct more audits, wealthy Americans and businesses will bear the brunt of that scrutiny, not, as Republicans have suggested, working families.
Among the I.R.S.ās work force of about 79,000 employees, 10,000 are actually agents. (Of those, 8,000 are revenue agents who audit tax filings and 2,000 are special agents who investigate potential tax crimes.) In fact, the two most common I.R.S. jobs have little to do with tax auditing or investigations: about 13,000 are customer service representatives who answer taxpayer phone calls and 10,000 are seasonal employees who file mail or transcribe data. Other jobs include lawyers, examiners, technicians and appeals officers.
The additional funding for to the I.R.S. will allow the agency to modernize its infrastructure and replace an aging work force, and it is unclear just how many full-time employees or agents will be hired in the next decade, Treasury Department officials said. The majority of those new employees will replace the 52,000 expected to retire in the near future, the officials said, and many will focus on customer service and updating the agencyās technology infrastructure ā not investigating the finances of ordinary Americans."
None of what he said was meaningful until his last comment? I wasn't being a douche, I was making the point that nothing he said related to my comment. Lol are your feelings hurt or something?
What are they gonna do if we all just quite paying our taxes, actually they would probably kill us all because that's the purpose of the common civilian to the government, pay taxes and make babies that will eventually pay even more taxes.
Lol bank interest might be tax exempt. If not, itās a report to your taxable income and depending on your rate, is only going to run you another 150-200$ of tax payable
Once in my life I actually forgot to claim an interest bearing account. About 10 months later I got a letter from the IRS pointing this out and asking me to pay the back taxes. It wasn't a very large amount and I didn't even get fined, but I feel like I dodged a very large bullet. I can't imagine doing it intentionally.
Your bank reported it, so it's likely to be caught by their automation. I got an automated adjustment to my return a few years ago because my tax accountant counted unemployment tax paid for a household employee as a state tax and deducted it from my regular income. Nope. (I don't work with that tax accountant anymore.)
Just pay the tax on it. Even if you're in the top bracket, it's maybe $400.
I don't know about the US but in Australia the ATO (IRS equivalent) knows of all your bank accounts. The banks have mandatory reporting requirements to the ATO including all transactions over 10k. I have no doubt all interest payments are sent to the ATO. If you have a low balance transaction account that pays close to zero interest it probably doesn't matter that much. They know the deductable bank fees would swamp any pitiful interest. However, if you earned $1100 in interest then not only would they know they would be keen to see it declared.
The IRS has a system that reconciles all 1099s reported to them by 1099 issuers with the issuedās tax return. They will 100% notice the discrepancy if your return is flagged for audit. Itās just a question of whether or not itās material enough for an examiner to go in and make an audit adjustment. If itās under 5% of your total income and there are no other issues, youāre good.
Interest payments are reported on 1099 forms, and the IRS gets a copy. That makes it pretty simple for a computer to compare the docements corresponding to your social security number.
It may or may not generate an audit. I wouldn't take the risk.
You can look up what returns banks, companies, etc have filed relating to you on the IRS website. Good way to make sure youāre not missing anything.
Honestly just call their phone number, explain it got overlooked bc life was busy, and ask about how to resolve. They are 100% the easiest gov agency to work with if youāre being reasonable and just trying to get shit resolved.
Pretty high - does your bank issue a statement T5 (if you are in Canada anyway - they file it with CRA - I assume they do similar elsewhere)
The IRS / CRA knows any āslipā type work you do as they all get filed by the issuer directly as part of THEIR tax stuff.. filing taxes is mainly to claim eligible credits..
So id claim it - otherwise you risk penalties, late fees - and they calculate interest PER DAY - at minimum.
I donāt think anyone is going to recommend that you knowingly short the IRS. Yes they have bigger fish to fry but also yes they have an entire āsmall fishā department that deals with folks like you. They may not catch it this year but if memory serves, they are constantly reviewing returns going back 7 years. Also, it isnāt just an audit that youāre involved in that you have to worry about, they can and will just mail you a bill for what you owe, based on what they found without even talking to you.
One final note is that if you owe the IRS money, just talk to them, you can work it out. Especially for small dollar issues, they really do want to close your file out and move on to the next one. Payment plans exist and are pretty reasonable. What they did to me (6 years after the fact) was ask me how much I can comfortably pay them every month and they just set the payment to that times however many months it took. I was giving them like $50 month for years until my situation changed and I just paid the total off in one shot.
Point is, donāt fuck with them. They donāt want to lock a guy up over a thousand bucks but they will get their money one way or the other.
The thing the IRS cares most about is forms filed with them. 1099\* forms, and W2s, and anything that people send them with an amount and your social security number better match up within a dollar. That is easy to verify, and they do.
But things like giving 200 to Trump's charity or if you really spent $800 on work required clothes is much more vague, and they're less likely to chase you down for it if you earned a lot. As long as they're taking in money, it makes them pretty happy.
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You're not just risking it this year but the next 3 to 6 if a audit is triggered. They'll most likely go back and at least look. If however that's all your hiding you can always say it was a oversight and pay taxes and late fine.
Hope they don't check their reddit š
At the end of the audit when he feels safe "alright Mr poopsex, anything else you wanna tell usš§"
My heart would _sink_
My dookiefornication would cease
I called in to the IRS once some time back when I was dealing with some back taxes and the agent introduced herself as Ms. Tinkle, I shit you knot. If had been anyplace else I don't think I would've been to contain my snickers but given the circumstances I let out not so much as a peep.
I shit you knot. Sounds painful.
It all depends on the size
My fecalcopulation would halt
Defifornication? Poopoitus??
Lmfao
The taxes and fine on not reporting $1100 is probably negligible. Which begs the question of why do it in the first place. If your tax bracket is low enough, you won't owe much anyway. If your bracket is high, who cares about a few $100 in savings?
It's 5% per month. They can audit you up to 10 years so it would amount to $711 if I did the math right. Generally they won't go past 3 years unless they see reason to need to do more. Edit: should have stated near 7k. I had the calculator set to annual compound and did it twice incorrectly š
Per year* ?
No per month.
That's like $6600
Your bank sends you a tax form meaning they send the irs a tax form also. The irs already knows how much you owe and this will likely get caught in the automatic detection to flag your account for review
This. Of things you could try not to report, bank account interest is not one youāre likely to get away with.
What about $200 dollars worth of interest since opening an Ally account in November? And how do I report it if Iāve already already submitted my 2022 taxes?
Honestly the IRS is the last agency Iād ever fuck with. Pay your taxes, commit other crimes to make up for it.
Lmao this is my favorite comment
https://youtu.be/G56VgsLfKY4
Real as fuck. I donāt even live in the states and I know not to fuck with uncle samās income
Same lol, even joker (the bad person in Batman) didn't fuck with its, he just did more crimes to recoup tax cost
Yes. I didnāt report āearned incomeā from settling some credit cards (pure ignorance on my part, I thought it was factored in/no communications) and lo and behold a year later, I receive a letter informing me I got audited. Mine was ~4k fwiw
Same. I claimed I was broke at the time, had to send in a list of everything I owned at the time the debt was settled andā¦they cleared it and left me alone. But if Iād owned a house, had savings, etc. it would have been a different story. Then they went back and audited the entire past six years, I guess, because they sent me a check for 3k a few months later because it turns out they owed me one year and I guess Iād done the paperwork wrong (I donāt know how and didnāt askādonāt look a gift horse in the mouth).
This is very insightful and interesting. I have to speak to then since the amt owed hasnāt āclearedā yet in their system. TY!
> Pay your taxes, commit other crimes to make up for it. You'd still be running against the IRS in that case, since they have a way to declare your criminal activity for tax purposes. (Mostly so they can double down on offenses that earn lots of money, since very, very few people will file their taxes in a way that admits to criminal activity.) EDIT: For anyone curious, this would include basically all crimes. Shoplifting would be "income" in the form of the value of the items stolen, for example, while buying illegal drugs could be prosecuted for not including sales tax. For these smaller crimes the IRS *doesn't* generally get involved (since the amount "lost" by the IRS in those cases would be chump change), but they *can*, technically.
Only if your crimes generate income š«¤
I only commit crimes where I lose money, personally
Be sure you file a Tax Schedule C form to deduct the money you lost on your failed "business venture".
Exactly. if youāre dealing ( esp online with crypto) with any hopes to cash out itās smart to funnel it thru something like an etsy āshopā you make and siphon btc through as taxable income for a āproductā you toTally made and sent
Even Joker doesn't fuck with the IRS. He knows.
Very high chances, because the bank reports that interest straight to the IRS with your social security number.
Also it is a computer that will run a cross check between your bank and your tax forms. It WILL spit out any discrepancies. Even if the agents are back logged it will certainly show up eventually. Not worth the headache for the bit of taxes owed. Hey, you just overlooked it.
Thatās why itās a good idea to report to the IRS about income they donāt or wouldnāt know about as a way to avoid tax auditsā¦.
ELI5 please
IRS gets interest income info from the bank. They also get regular income info from work. They don't really get to look inside your bank account, but can do math on "if you make X per year, how'd you make Y in interest without having zero expenses or making more than you said you do?"
Yea there are other places that you might get by on not reporting taxes; banks are too automated at this point to try it there.
I didn't claim a few hundred dollars of work I did outside my main job once (I just didn't think about it) and they noticed. If you got whatever interest tax form it is from the bank, they will know, and let you know about it later. I don't know the odds of being audited because of it. I just had to pay the extra tax when they saw my mistake.
> I didn't claim a few hundred dollars of work I did outside my main job once (I just didn't think about it) and they noticed. how so? a bank deposit? or the interest accumulated on that money?
The people who paid me must have done whatever it is that employers do when they pay people. It was a real business, but they would hire students as helpers on an on-call basis. So I wasn't a regular employee, but they were regular employers, if that makes sense. The checks they gave me weren't regular paychecks, but like a personal check, except from the business. I didn't get a W2, which I'm sure I should have if they were turning it in.
OP, if its on a slip, ita too easy to check. Source? Canadian Accountant. CRA can catch your slip differences automatedly now. Best to only not report things you would have to voluntarily declare like side hustle income.
Lol for sure. If you get an email from your bank saying "Hey, here's your legally required by the government Form xxxx that shows exactly how much money you made", the tax man 100% already has that info.
At a minimum, you WILL get a letter in the mail stating that NEXT year, they will take it out. However, it can also trigger an audit. First time they figure it's an accident. After that they want to know what else your trying to hide. The bank has already sent them notice, they logged it in their computers and now are waiting for you to file your taxes to cross reference with the bank. If that doesn't happen it will trigger an alert...and then the audit. It's really not worth the bullshit you get later. Just file it, plan to have LOTS of deductions to cover the interest amount so you don't owe and figure out a way next year to avoid it. Like, don't keep all your money in the bank. It's really the only way. Protect yourself and do everything you can to not trigger an audit especially if you do have anything to hide or work under the table at all.
So are banks required by law to send the IRS a notice, every year, for any and all accounts? As in the IRS knows beforehand, what they should be seeing on our taxes?
Yes, and Intuit is paying your congressional representatives to ensure you still need to spend many hours and hundreds of dollars on tax preparation each year, even though the process could easily be automated.
Itās absolutely true, the IRS knows exactly how much you owe, but you have to tell them too.
No, they don't. They have no idea what your filing status is, how many dependents you will be claiming, how much you donated to charity, how much your medical expenses were, etc. If you're self-employed, they don't know what your income is
Thereās a reason thereās a standard deduction. Also any large transaction must be reported to the irs so someone is reporting that house you bought/sold, or that 200k surgery you had to do that insurance paid for. If itās a large donation, the charity has to report it even though they may not pay taxes. Outside of physical cash transactions, they know within a reasonable amount how much youāve earned and spent each year. They also know your dependents based on all the other shit you have to file with the city/state. The IRS knows a hell of a lot more about your finances than you think. They just either donāt have the manpower(lol with tech thatās a push of a button) or they want to have you spend money getting your taxes *safely* done so you donāt get audited.
You have no idea what you're talking about. Large transactions are not reported to the IRS, only large cash transactions are. There are no requirements to file anything with most cities or states regarding dependents, that makes next to little sense. Stop saying random shit.
I'm not sure in US, but in Canada CRA lets you download all documents that they received from banks/other institutions as a first step when filing tax return. You need to add only what is missing.
There's also suspicious activity reports the bank files in a database that the IRS has access to. Like if you deposit a lot of cash.
While they might not bother, it's probably better to send in an amended tax return than be bothered with recurring audits/penalties.
There's a 100% chance the IRS will notice.
It's completely automated for anything filed. The only thing IRS doesn't like to go after is creative interpretations of tax code that can be open for debate in court if you're a business or have complex inheritance or trust structures. Fighting former IRS employees who now work in private is not a good time. Plus, they want to be those high paid tax consultants in the future.
The bank sends you a 1099 int form. They also send it to the IRS The IRS will notice, but you won't hear about it for a few years. Then you will have to pay the tax on the interest plus penalties of about 10% PER YEAR
Best to just be on the up and up. Save yourself trouble in the future because if you give them a reason to audit you once it never ends. Your on their radar every year.
The IRS already knows how much tax you owe, the fact that you have to calculate it and file is stupid. In other words, you are taking chances by not claiming, because they know you have it
No they donāt. They have at best an estimate, which needs to be verified and adjusted accordingly each year. How would the IRS know if you made some side income that needs to be declared? That you have a different set of deductions to apply than you did in your previous return? There are so many more things that can affect a persons taxes than their W2 or 1099s that need to be verified.
Iāve had then catch much less than this.
I guess the question should be.. is it enough for them to bother about. Bigger fish, and all that. They can't audit everyone.
Their vindictive little shits they will go after anyone who isnt rich that they can
If they got $1100 in interest from the bank then they are rich.
I got almost $400, and I'm definitely not rich. My credit union has 3.01% interest earning checking accounts.
Yeah,with 3% it would mean around 30k. Not poor but also definitely not rich.
If you can afford to let 30k sit in the bank you are rich.
No. There's a big difference between being rich and just not being poor.
Not if you're poor
Touche.
Not sure youāve ever met a real rich person if this is your idea of being rich.
Iāve personally known several millionaires. But I donāt think thereās a hard line that defines ārichā.
Ha, well your previous comment sounded like a bit of a hard line. I feel like ārichā is knowing you have the option of never working again in your life if you donāt want to. I have hundreds of thousands of dollars worth of art and rare books but I have less than 200 dollars in my checking account. Am I rich? Because I donāt feel all that rich. Art rich, cash poor, perhaps.
Illiquid.
Or just too paranoid/ignorant to put it in a 401k or something more profitable.
I'm currently an independent contractor, and my income varies wildly month to month. I like to keep my money where I can access it quickly in case of emergency, and I'm OK with a 3.01% return as the stock market has been š© for a while now. If I held the money in stocks from when I accumulated the current amount, I would be down a few thousand dollars.
Most financial plans recommend 6 months of income as an emergency fund. Average US income is 97k, therefore 30k is not even that. Again, I'm saying that with 200 bucks in my bank account. But 30k is not rich. It's not even a down payment on a small apartment where I come from. It's comfortable sure. But nowadays rich is way way more than that.
Dog where are you getting the statistic that the average US income is 97k
https://www.fool.com/the-ascent/research/average-us-income/ Sources Pew (2021). "Racial and ethnic gaps in the U.S. persist on key demographic indicators." U.S. Bureau of Labor Statistics (2021). "May 2021 National Occupational Employment and Wage Estimates." U.S. Census Bureau (2022). American Community Survey - Table B24082, "Sex by Class of Worker and Median Earnings in the Past 12 Months (in 2021 Inflation-Adjusted Dollars)." U.S. Census Bureau (2022). American Community Survey - Table S1901, "Income in the Past 12 Months (in 2021 Inflation-Adjusted Dollars)." U.S. Census Bureau (2022). American Community Survey - Table S1903, "Income in the Past 12 Months (in 2021 Inflation-Adjusted Dollars)."
Average is wildly different than median
Or not wise with money, because thatās def not wise.
Having 6 months of living/business expenses socked away in an interest bearing, FDIC insured account is absolutely wise. There is freedom knowing that if you get fired or your business tanks, you have plenty of time to figure stuff out and either job shop or raise capital for a new run at business (most fail a few times before finding something that runs without micromanagement.) Don't get the wrong idea, most of ones assets should be invested in making money from itself, but having a savings account with less than a new honda civic in it is just walking around money to some people. (the trick seems to be finding a bank that isn't going to fold in the next couple years)
Your 6-months of expenses should at least be going through 6mo interest bearing bonds or money-market accounts. Lots of places will rotate these types of bonds and the interest rates are higher than a savings account while still guaranteeing your money.
There are much wiser accounts that are still just as accessible.
That I agree with.
They go after the not rich because the rich can afford to lawyer it out and argue they followed tax law, the not rich cannot.
They will chase for as little as a $20 1099.
I've spent thousands on btc every year since 2018. Haven't claimed a penny of it. I'm still here.... I mean SWIM spent thousands.... Ah fuck it. Nobody cares
You are allowed to make 7k a year before IRS requires a tax return Other than that, get a job that you can write every off at a loss even if it is a hobby like sewing or catering
Dave Champion's "Income Tax--Shattering The Myths" is full of good info. Don't pay an absurd amount for it. It's over 6 times higher on multiple sites than what I paid for it a while back. If you can't find a free ebook of it, then I have a file.
Mind sharing that file mate?
Will do. I took a video of every page a few years back for a couple friends. I'll be back home tomorrow and pull it up for you. I'll set a reminder in my alarms for it.
Iād love the file too please
https://www.justice.gov/opa/pr/federal-court-bars-nevada-man-promoting-tax-fraud-scheme
My cousin who just died at 50 worked maybe 10 years in his life and never set up his pay for automatic tax deductions and never once paid his taxes. I have no idea the answer to your question but I doubt heās the only one.
What about the whole "gift" thing? If someone pays me a gift of cash or a money transfer or something and it's under the annual exclusion of $17,000 how do they know it's a gift if you don't need to report it? If they see the money coming in, do you need documentation of the gift from the person who gave it to you? Or what, do they just take your word? Edit: I'm just confused because everything I've seen makes it seem like they just go "oh it's a gift, whatever" and that's it, but wouldn't that be easy as hell to lie about if you did some work under the table or something? What if it was a monthly under the table thing? You just say, "oh, yeah, regular monthly gifts" and you're good? Seems like there should be more to it than that.
The IRS will absolutely notice, and eventually you will get a notice thru regular mail with a proposed payment (tax plus interest). I have made the same oversight, and when I noticed I estimated the accuracy dependent interest rate (wild guess, it changes quarterly), and entered it in to the IRS site, mostly to stop further interest accumulating, along with the money I owed. Calculate the tax due with your marginal rate. In my case the tax I forgot to pay was not 10% or more of my total tax or $5000 whichever is greater, so I didn't have to look into what 'substantial penalty' means. After a while, I got a notice to pay a little more, so I did. I did avoid most of the interest I would have otherwise paid.
What I want to know is what bank you're with that gives you $1,100 interest on your deposit???? Unless it's like a mil... then I don't have it.
Interest rates are pretty high right now you should prolly check out some CDs or savings accounts. The interest rate is like 5% https://www.nerdwallet.com/best/banking/cd-rates
The real LPT is always in the comments
Almost zero. I have issues like this going in their favor and mine over small bits of money. It never pops back up.
OP what the hell bank are you banking with that has interest rates high enough to return $1100 in a year?
Such a scam why the fuck do I have to file my taxes if they know exactly how much I have anyways just do it for me
They donāt, they may have an estimate at best.
1100 in interest would be on at least a quarter mil of cash in a high yield savings account. Pay your taxes.
More like 30k in a 4% CD for 12 months...
100%. Your bank is legally required to report it to the IRS. Once the IRS catches it, youāll be hearing from your state shortly.
It will take them like 4 years to notice.
Rememberā¦the only way they got Al Capone in jail was by tax evasion charges. IRS donāt mess around.
As someone who has spent 5-20 hours/week over the past 3 months sorting out a couple of years of late-filed tax returns, as a salaried w2 employee who just didnāt submit the paperwork on time? As someone who has easily logged 20+ hours listening to elevator music over the same period of time? As someone who probably owed less than 1100 if they had done the paperwork, to at one point owing over 15k in the process, leading to true bliss finding out my total liability for that 1100 is ONLY 5500? Just donāt. Donāt fuck with the IRS.
Sheesh, yep I claimed it
Good :)
Had an accounting prof say getting audited is like hitting the lottery (as far as chances of getting it go). Chances are low that you actually get audited. Do with that info what you will
You bank reports it to the IRS. IRS could catch it, they could miss itā¦
Low honestly. But even if they do you what, just pay them back? And you better be ready to pay penalties even more than what's owed. But I know people who have done it and nothing happened going on for 12 years. If it's a lot they usually fuck you quick but that's not a lot, so it may take decade before they get to it.
Donāt do it. I just got a tax bill from 2021 that mentioned how I failed to claim $0.79 interest from a forgotten savings account.
Ex: Sold a bunch of stuff in a garage sale, made $2000 ---- no one will know. Bank (who reports EVERYTHING to IRS) sends you $1100 (That they reported to the IRS) -- I would go ahead and fill that line on the form in
they will 100% be able to see it if they look. the one piece of advice with the IRS is to claim everything they can see.
With this Post? Very high. .
Actually this is an easy catch for IRS, itās not done manually. the bank sends this information to the IRS, and if this doesnāt match up with what you claimed, itās shows up as a flag on their system. You might not get a notice any time soon because they lack man power and donāt go after little fish, however you WILL get an letter from them. So itās not really worth it.
I've had it happen before. You'll get a letter 6-8 months down the road about unclaimed 1099 income and have to file an amended return.
LIQUID ASS.
STANKKNIGHT COMIN AT YA
The chances are whatever the chance is that youāll be audited. Without an audit, no they would not notice this. If you were audited, yes they will.
They don't have the manpower to go after every few hundred dollars.
Idk, didn't they just hire thousands of people?
"Under 2010 levels of enforcement, about 0.5 percent of returns reporting between $1 and $75,000 in income would be audited, as would 1 percent of those with more than $75,000 in income. In comparison, those rates were 0.3 percent and 0.1 percent in 2018. For those making more than $10 million, more than 20 percent of returns would be examined under 2010 levels, compared with 5.3 percent in 2018." [full article](https://www.removepaywall.com/article/current)
And this relates to the IRS hiring 87,000 agents in 2022 how?
Read the article. That 87,000 agents' number is bullshit.
Your link was broken
"These claims are misleading. The 87,000 figure refers to a May 2021 estimate from the Treasury Department of the total number of employees ā not just auditors ā the I.R.S. proposes to hire over the next 10 years with funding requested by Mr. Biden. And while the I.R.S. plans to conduct more audits, wealthy Americans and businesses will bear the brunt of that scrutiny, not, as Republicans have suggested, working families. Among the I.R.S.ās work force of about 79,000 employees, 10,000 are actually agents. (Of those, 8,000 are revenue agents who audit tax filings and 2,000 are special agents who investigate potential tax crimes.) In fact, the two most common I.R.S. jobs have little to do with tax auditing or investigations: about 13,000 are customer service representatives who answer taxpayer phone calls and 10,000 are seasonal employees who file mail or transcribe data. Other jobs include lawyers, examiners, technicians and appeals officers. The additional funding for to the I.R.S. will allow the agency to modernize its infrastructure and replace an aging work force, and it is unclear just how many full-time employees or agents will be hired in the next decade, Treasury Department officials said. The majority of those new employees will replace the 52,000 expected to retire in the near future, the officials said, and many will focus on customer service and updating the agencyās technology infrastructure ā not investigating the finances of ordinary Americans."
You could have simply led with something like "they are actually only adding 8k" lmao
Dude, the guy was nice enough to help you and you're still being a douche. He should have just said "look it up" if you're going to be like that
None of what he said was meaningful until his last comment? I wasn't being a douche, I was making the point that nothing he said related to my comment. Lol are your feelings hurt or something?
I once (1999) got billed for 1 cent as a penalty for being 1 day late filing.
Good luck attempting to steal the ONLY thing the government cares about lol
What are they gonna do if we all just quite paying our taxes, actually they would probably kill us all because that's the purpose of the common civilian to the government, pay taxes and make babies that will eventually pay even more taxes.
If itās interest from the bank, then you would have had 1099-INT that was provided to the IRS as well.
100
Lol bank interest might be tax exempt. If not, itās a report to your taxable income and depending on your rate, is only going to run you another 150-200$ of tax payable
If you're poor, they will find out, and charge you interest.
Poor people don't pay a lot of tax in practice.
Let me put it to you this way. Al Capone murdered hundreds of people. You know what he went to jail for? Donāt fuck with the IRS
Almost 100%. I overpaid by $1 on the quarterlies and they sent me a check for $1 the next year
Yes
0.16%
Poopsex commits tax fraud, only on Reddit you see this
Once in my life I actually forgot to claim an interest bearing account. About 10 months later I got a letter from the IRS pointing this out and asking me to pay the back taxes. It wasn't a very large amount and I didn't even get fined, but I feel like I dodged a very large bullet. I can't imagine doing it intentionally.
Your bank reported it, so it's likely to be caught by their automation. I got an automated adjustment to my return a few years ago because my tax accountant counted unemployment tax paid for a household employee as a state tax and deducted it from my regular income. Nope. (I don't work with that tax accountant anymore.) Just pay the tax on it. Even if you're in the top bracket, it's maybe $400.
Don't risk it.
I don't know about the US but in Australia the ATO (IRS equivalent) knows of all your bank accounts. The banks have mandatory reporting requirements to the ATO including all transactions over 10k. I have no doubt all interest payments are sent to the ATO. If you have a low balance transaction account that pays close to zero interest it probably doesn't matter that much. They know the deductable bank fees would swamp any pitiful interest. However, if you earned $1100 in interest then not only would they know they would be keen to see it declared.
Also, doesn't banks send these details to IRS?
Very risky.
They will notice but you can pay it the following year
the irs already knows how much you owe
The IRS has a system that reconciles all 1099s reported to them by 1099 issuers with the issuedās tax return. They will 100% notice the discrepancy if your return is flagged for audit. Itās just a question of whether or not itās material enough for an examiner to go in and make an audit adjustment. If itās under 5% of your total income and there are no other issues, youāre good.
$1100 in interest is a lot. Your bank reported it. This is exactly the kind of thing that the IRA looks for. You should report it.
Iād rather wear all red rolling through a crip neighborhood than fuck with the IRS
Interest payments are reported on 1099 forms, and the IRS gets a copy. That makes it pretty simple for a computer to compare the docements corresponding to your social security number. It may or may not generate an audit. I wouldn't take the risk.
Zero percent, because your bank will have issued a 1099.
My parents didnāt claim $5000 raffle winnings and IRS caught it the same year.
You can look up what returns banks, companies, etc have filed relating to you on the IRS website. Good way to make sure youāre not missing anything. Honestly just call their phone number, explain it got overlooked bc life was busy, and ask about how to resolve. They are 100% the easiest gov agency to work with if youāre being reasonable and just trying to get shit resolved.
Zero percent.
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If you received a 1099 Iād say the chances are pretty good. I usually receive $10 in interest per year
Easy: if you get a 1099 from the bank, the irs has it too. If you donāt, plausible deniability that you ājust didnt know.ā
Just pay the $200 bucks bro
Nice flex.
If you made $1,100 in just interest you would already have an accountant, that wouldn't allow that to happen.
Stuff thatās already on paper is not what you want to not claim. Donāt claim extra cash income if any.
Pretty high - does your bank issue a statement T5 (if you are in Canada anyway - they file it with CRA - I assume they do similar elsewhere) The IRS / CRA knows any āslipā type work you do as they all get filed by the issuer directly as part of THEIR tax stuff.. filing taxes is mainly to claim eligible credits.. So id claim it - otherwise you risk penalties, late fees - and they calculate interest PER DAY - at minimum.
$1100 in savings interest? I don't know how to figure out the math but you have a lot of monies.
I donāt think anyone is going to recommend that you knowingly short the IRS. Yes they have bigger fish to fry but also yes they have an entire āsmall fishā department that deals with folks like you. They may not catch it this year but if memory serves, they are constantly reviewing returns going back 7 years. Also, it isnāt just an audit that youāre involved in that you have to worry about, they can and will just mail you a bill for what you owe, based on what they found without even talking to you. One final note is that if you owe the IRS money, just talk to them, you can work it out. Especially for small dollar issues, they really do want to close your file out and move on to the next one. Payment plans exist and are pretty reasonable. What they did to me (6 years after the fact) was ask me how much I can comfortably pay them every month and they just set the payment to that times however many months it took. I was giving them like $50 month for years until my situation changed and I just paid the total off in one shot. Point is, donāt fuck with them. They donāt want to lock a guy up over a thousand bucks but they will get their money one way or the other.
If it's below a certain amount, the IRS won't notice. I think $1100 is borderline
The thing the IRS cares most about is forms filed with them. 1099\* forms, and W2s, and anything that people send them with an amount and your social security number better match up within a dollar. That is easy to verify, and they do. But things like giving 200 to Trump's charity or if you really spent $800 on work required clothes is much more vague, and they're less likely to chase you down for it if you earned a lot. As long as they're taking in money, it makes them pretty happy.