In Office Examination Notice
This is my first post, am hoping someone with experience can help answer a few questions and maybe calm my nerves.
I recently received a notice in the mail requesting an in office examination of my 2013 taxes. It listed 3 areas to address, "Gifts to Charity/Cash Donations", "Home Business/Office" and "Capital Gains/Losses".
I called the IRS agent to confirm my meeting, and have gathered all the requested receipts and documents to each question asked. I actually have 95% of everything requested, a few questions pertain to things I did not claim "show receipts of business rental equipment, etc" ...I had no business rental equipment nor did I claim any (I double/triple checked this and there was nothing claimed here). So not sure why that was asked? I got my church to write me on their letterhead an itemized list showing every check I wrote, ..I go to church and donate quite a bit ...for someone who does not go to church I could see how this may look excessive? But I have evidence to prove my cash contributions (I also printed out each check and bank records to show each item my church listed was actually cashed from my bank account).
I found 3 things that have kept me up at night.
1) I accidentally entered a 1099 from my home business twice. I should have only entered that 1099 one time, but did it twice (this is in the IRS's favor) --I would believe.
2) On my Cash vs Non Cash gifts I accidentally entered each in the wrong box (cash gifts in the non cash gift box and vice versa). This doesn't seem huge, right? The difference when fixed only changes my taxes a couple hundred dollars at best.
3) I did not report interest income earned on a mutual type fund I have. I never saw a dime of the interest dividend, it was re-invested in the account. In fact the 1099-div (I think that is what it is) was never even mailed to me, ..they sent me an email stating I could log in to my account to go get it. That is how I missed it, i never got it in the mail. The amount was for about $500 total or thereabout. So again, I don't think i'd be liable for more than a few hundred bucks. But geesh, how did I make this mistake and forget it?!
4) Here is the big one, I accidentally entered my home mortgage interest and home property taxes as a "DIRECT" business expenses. It should have been an "INDIRECT" business expense. I don't know how I did this, but I don't think I even knew what the difference was when I entered this information. I used TaxAct software which just asks you questions, so what is actually entered on a sheet is never really seen or known. I assumed that I answer all the questions, hit enter and submit to the IRS for refund. All is good. Sadly I am learning the difficult way that I shouldn't use online software if I am unfamiliar with taxes and finances. The difference in taxes on this one goes from me having received a $4,000 return to owing about $5,000 give or take. ...so looking at a $10K mistake I think.
I have been up all night every night letting this eat at me. I feel horrible that I made these mistakes. I feel worse about what the IRS agent may say during my "examination". Here is the deal, I have no problem paying what I owe, in fact I WANT to make this right. I think it is the unknown that is eating me up.
Will this be forgiven? Will I just have to pay the tax difference plus interest? Or will penalties be added to this? Would a hypothetical $10k mistake be just that, or will it be more like $15k with tax and penalties?
Since the examination is focussed on my 2013 tax year will it most likely stay at that, or will the examiner also look at my 2014 tax year return as well? I guess I'd like to pay what I owe and just move on, ..fearing this will escalate into a saga that never ends? I don't have anything to hide, but just can't deal with this anymore. My meeting isn't for another 3 weeks.
Oh, should I go to the meeting and present what I found and the errors listed above? (along w/ all my receipts, etc).
Any advice would be helpful.