What You Should Know About Net Worth Audits

Running a car wash wasn’t the fulfillment of a dream for Bryan Cranston’s character on “Breaking Bad”. It was a necessity to allow him to legitimize his ill gotten gains from selling crack. A Net Worth Audit Toronto Ontario residents experience will determine if you are living beyond your means or are in fact using additional money that you have earned illegally. It will also discover any earnings you have chosen not to claim on your income taxes. Here is what you should know about net worth audits.

The Obvious Red Flags

Consider this: You file your taxes every year on time and pay any outstanding taxes without blinking an eye. However you are only claiming $30,000 per year yet drive a paid for BMW and live in a ridiculously large home on the Bridal Path. This is a perfect example of the red flags that shout to the CRS it is time for a net worth audit.

The Net Worth Audit

A net worth audit for Toronto residents will look at all of the assets you have such as your home, car, boats, additional property, etc. and then deduct any debts. This number will then be compared to your living expenses and the amount of money you have been declaring as income. If there seems to be something not synching up they will begin to dig further with the goal of discovering any unclaimed earnings.

Legitimate Reasons

The only way to come out with a clean slate following a net worth audit is to ensure you keep impeccable records. There are many legitimate reasons you might be living the life of Reilly. You might have inherited money for example. You also could have won money or even a house or car in the Princess Margaret Lottery. You might even just have access to money thanks to a generous family member, friend or romantic interest. The challenge here is proving this is the case.

Paper Trail

In order to avoid looking like a tax fraud you have to ensure you keep detailed records of any additional money and assets that are not actual earnings. This includes:

* Winning lottery tickets
* Large sums of gifted money
* Proof of inheritance
* Proof of personal loans not acquired through lending institutions
* Money brought in from your home country

A paper trail is the only thing that will save you during a net worth audit so pay attention and keep good records of all of your assets including cash.

To know more visit the site Taxperts.on.ca.

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