|
worried about triggering an audit
02-26-2017, 09:44 AM
|
#1
|
Full time employment: Posting here.
Join Date: Jan 2013
Posts: 775
|
worried about triggering an audit
Last year I worked four months on a 1099 contract.
I put $10K into a solo 401K at Fidelity.
That is a sizable subtraction on line 36 of Form 1040 essentially taking 1/4 off the gross income.
Would this cause the IRS to look more closely at my return?
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
02-26-2017, 10:04 AM
|
#2
|
Moderator
Join Date: Feb 2010
Location: Flyover country
Posts: 25,155
|
Why would you care, assuming you're honest?
Most audits are very simple. I've been through a couple of them.
- They send you a letter telling you what they think.
- You send them a letter back with an explanation and copies of pertinent documents.
- They send you a final letter saying "Never mind."
Of course that simple 3-step process will take several months, but still nothing to cause any concern. Just keep all your paperwork for 3-4 years and don't worry.
|
|
|
02-26-2017, 10:05 AM
|
#3
|
Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 47,467
|
I don't know, but TurboTax tells you if you are audit bait or not. They said I was not (whew!). I didn't do anything too weird but my AGI was much lower than the previous year so I was a little uneasy until TurboTax told me that.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
Happily retired since 2009, at age 61. Best years of my life by far!
|
|
|
02-26-2017, 10:54 AM
|
#4
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2012
Posts: 11,701
|
Quote:
Originally Posted by braumeister
Why would you care, assuming you're honest?
Most audits are very simple. I've been through a couple of them.
- They send you a letter telling you what they think.
- You send them a letter back with an explanation and copies of pertinent documents.
- They send you a final letter saying "Never mind."
Of course that simple 3-step process will take several months, but still nothing to cause any concern. Just keep all your paperwork for 3-4 years and don't worry.
|
+1
|
|
|
02-26-2017, 10:56 AM
|
#5
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,204
|
+2
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
|
|
|
02-26-2017, 11:00 AM
|
#6
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,184
|
No, this doesn't sound like it would trigger an audit. It's done, so what are you going to do about it anyway? Or do you usually try to do other shady things but are afraid to do so this year because of a potential audit? In which case, yes, you almost certainly will be audited, so don't cheat on your taxes.
|
|
|
02-26-2017, 12:13 PM
|
#7
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2013
Location: Texas
Posts: 10,836
|
|
|
|
02-26-2017, 12:21 PM
|
#8
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2008
Location: No fixed abode
Posts: 8,764
|
I've got a fairly complicated return every year, with being self-employed (and yet still FIREd), having rental properties, investment income, renting a townhouse to DW for less than fair market value and having to declare that income, and in the last few years dealing with my Mom's estate and the sale of her house. TurboTax always has me well into the orange on the audit scale, but I've never been audited during this time (just knocked on wood as I typed this). It's slightly easier to get a full rubber glove audit than it is to win the lottery, but not much. Back when my returns were much simpler (job and some investment income only), I did get mail audited once. As has been said, no big deal. Asked, answered, never hear from them again.
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Anonymous (not Will Rogers or Sam Clemens)
DW and I - FIREd at 50 (7/06), living off assets
|
|
|
02-26-2017, 12:24 PM
|
#9
|
Thinks s/he gets paid by the post
Join Date: Jun 2013
Location: Bonita (San Diego)
Posts: 1,795
|
Sometimes I worry I may get audited because I have a somewhat complex filing situation due to military status, state of residence, etc. Then I figure, even if I get audited and they find I did something wrong, I'm not evading anything and I'm not doing anything illegal. Maybe they'll tell me I calculated something wrong or claimed some $1000 deduction that isn't correct... but they're not going find anything that causes me to do anything more than: (1) respond via letter; and/or (2) write a small check.
__________________
"So we beat to our own drummer in the sun;
We ask for nobody's permission to run.
I just wanna live in a world like that;
Now I'm gonna live in a world like that!" - World Like That, O.A.R.
|
|
|
02-26-2017, 12:29 PM
|
#10
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
|
I put 100% of my 1099 income less 1/2 FICA+medicare tax into my solo 401(k). I do this routinely. It's all legal for me.
I don't know about your numbers because you didn't provide details.
Here is the NYTimes sample 1040 for 2016. It seems less than half of one's income ends up being taxable. Check it out: https://www.nytimes.com/2017/02/17/b...form-1040.html
|
|
|
02-26-2017, 03:31 PM
|
#11
|
Full time employment: Posting here.
Join Date: Jan 2013
Posts: 775
|
Quote:
Originally Posted by LOL!
I put 100% of my 1099 income less 1/2 FICA+medicare tax into my solo 401(k). I do this routinely. It's all legal for me.
I don't know about your numbers because you didn't provide details.
Here is the NYTimes sample 1040 for 2016. It seems less than half of one's income ends up being taxable. Check it out: https://www.nytimes.com/2017/02/17/b...form-1040.html
|
Thank you for the link.
This is the first time ever where my entire income came almost all from 1099 work and dividends.
Because of qualified dividends and itemized deductions (high NJ real estate taxes) and $10K into the solo 401k, I end up with zero taxes on Line 44. That's a first for me. Obviously, I have the self-employment tax on Line 57.
|
|
|
02-26-2017, 05:12 PM
|
#12
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,194
|
Unless you have a lot of other income that could be subject to tax I would think this is a non-event....
IOW, putting that $10K back into income would not be much money to them... maybe nothing...
I would bet no audit...
|
|
|
02-26-2017, 10:09 PM
|
#13
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 16,972
|
OP - don't worry, you made me look and last year I put 71% of mine into the 401K solo.
|
|
|
02-27-2017, 03:10 AM
|
#14
|
Thinks s/he gets paid by the post
Join Date: Dec 2010
Location: Midwest
Posts: 1,787
|
IRS audit team most likely has bigger fish to fry.......
|
|
|
02-27-2017, 08:47 AM
|
#15
|
Full time employment: Posting here.
Join Date: Jan 2013
Posts: 775
|
At least this year will give me an idea of what a year with only Roth conversion would look like.
|
|
|
02-27-2017, 01:11 PM
|
#16
|
gone traveling
Join Date: Apr 2011
Posts: 3,375
|
Quote:
Originally Posted by broadway
Last year I worked four months on a 1099 contract.
I put $10K into a solo 401K at Fidelity.
That is a sizable subtraction on line 36 of Form 1040 essentially taking 1/4 off the gross income.
Would this cause the IRS to look more closely at my return?
|
If $10K is 25% of your gross, or even 10%, you're too small for the IRS to give a hoot about.
|
|
|
02-27-2017, 01:26 PM
|
#17
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2012
Posts: 6,098
|
Quote:
Originally Posted by braumeister
Why would you care, assuming you're honest?
Most audits are very simple. I've been through a couple of them.
- They send you a letter telling you what they think.
- You send them a letter back with an explanation and copies of pertinent documents.
- They send you a final letter saying "Never mind."
Of course that simple 3-step process will take several months, but still nothing to cause any concern. Just keep all your paperwork for 3-4 years and don't worry.
|
+1
I have also been through this process - if you have the paperwork proof it is no big deal. I would not be concerned.
__________________
FIREd date: June 26, 2018 - "This Happy Feeling, Going Round and Round!" (GQ)
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Thread Tools |
|
Display Modes |
Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|