In a recent interview with The Associated Press, Internal Revenue Service Commissioner Danny Werfel announced that the IRS has intensified efforts to seek tax evasion cases among high-income earners.
What is Considered a High-Income Earner According to IRS?
For tax purposes, the IRS categorizes high-income earners as individuals who fall within the top three tax brackets. Specifically, this includes those earning over $191,951 of taxable income as a single person, a single head of household, or a married person filing separately, or over $383,901 of taxable income as a married person filing jointly.
Once you identify where you belong, the next is to figure out if you're at risk for the IRS tax evasion crackdown.
According to Yahoo News, the IRS is intensifying its focus on individuals who report annual incomes exceeding $1 million and carry tax debts surpassing $250,000. With 1,600 taxpayers fitting these criteria, owing collectively hundreds of millions in unpaid taxes, the agency is deploying specialized revenue officers to address these high-end delinquent accounts, commencing in fiscal year 2024.
The IRS crackdown also targets those incorrectly claiming deductions, particularly for personal flights on corporate jets, and those failing to file taxes altogether.
Werfel reiterated that taxpayers should pay their fair share and signaled that the IRS is employing advanced technologies, such as artificial intelligence, to identify tax evaders.
This initiative follows a substantial budget boost from the Inflation Reduction Act. It aims to boost tax collection from high-income earners while minimizing audit rates for those earning less than $400,000 annually and reducing audits for moderate-and low-income taxpayers claiming the Earned Income Tax Credit (EITC).
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General IRS Tax Tips
As the tax filing deadline of April 15 approaches, the IRS also reminds taxpayers to file accurately and promptly to avoid penalties. To expedite the process, the agency recommends electronic filing methods such as IRS Free File or alternative e-file service providers.
Additionally, taxpayers should ensure the accuracy of their information, report all taxable income, and meet the signing and dating requirements.
For those needing more time, the IRS advises requesting a six-month extension until October 15 to prevent late filing penalties.
Besides the IRS crackdown on tax evasion cases among high-income earners, they also introduced a new Direct File program. As reported by VCPost, this allows individuals with straightforward tax situations to file directly with the IRS at no cost.
Currently available in 12 states, this initiative aims to simplify the tax filing process and has already garnered positive feedback from over 50,000 users. While Commissioner Werfel did not elaborate on the program's future, its initial success means there's a high demand for accessible and efficient tax filing solutions.
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