What Methods Does The IRS Use To Find Unreported Income? - Asian American CPA

Описание: What Methods Does The IRS Use To Find Unreported Income? Are you curious about how the IRS detects unreported income and what methods they use to ensure everyone pays their fair share of taxes? In this informative video, we’ll explain the different strategies the IRS employs to identify missing income. We’ll start by discussing how third-party reporting forms like W-2s and 1099s help the IRS match reported earnings with what employers and financial institutions send in. We’ll also cover how bank deposit analysis can reveal hidden cash or large unreported deposits. Additionally, we’ll explain the indirect approach called source and application of funds, which compares your income with your expenses and assets to spot discrepancies. For small business owners and self-employed individuals, the IRS reviews books and records to find underreported income or overstated expenses. We’ll also share how data analytics, random audits, and tips from whistleblowers play a role in uncovering tax evasion. Finally, we’ll discuss the consequences of unreported income, including penalties and possible criminal charges, and provide tips on maintaining proper records and responding to IRS notices. Whether you're an individual taxpayer or a small business owner, understanding these methods can help you stay compliant and avoid penalties.

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About Us: Welcome to Asian American CPA! Our channel is dedicated to providing clear and accessible tax guidance tailored specifically for Asian American communities. We cover essential topics, including tax filing for immigrant families, bilingual tax resources, small business taxes, and understanding U.S. tax laws.