a close relative got audited this year.
I dont know the exact details, but she made some kind of mistake on their mortgage interest deduction.
audit #1 happened earlier this year and they had to pay around $10k, including interest and penalties. they didn't have an emergency fund, so the relative got a zero interest credit card and expects to be able to pay off the $10k before the zero interest period runs out.
audit letter #2 just arrived recently. they're on the hook for the same mistake in a different year's tax return for $11k this time. it sounds like they won't have the cash or savings to pay for this one either.
she talked to a CPA acquaintance and was told that she basically f-ed up their tax returns for the past 9 years (that's when they bought the house). the 2 audits were for recent year tax returns. CPA advised her that she can file an amendment for the past 3 years and 2017 is the only year left for her to file an amendment. basically, fix it before the IRS finds it and pray that they can get the penalties and/or interest waived for 2017.
she's scared out of her mind because she believes that they can be audited up to 10 years back and that leave 6 more years of bad returns that could come back to haunt them.
I apologize for the lack of details, but is there much hope of getting through this? should be talking to a CPA? an attorney?
A quick search on Zillow suggests that property values may have risen enough for them to sell the house, cover 9 years worth of penalties, and still walk away with a little bit of profit. selling is an unpleasant option, but i think owing the IRS $90k+ is a worse option.
Submitted November 30, 2018 at 09:07PM by 5yearsAgoIFU https://ift.tt/2KKw7kh
