| 9 economic stimulus bailouts, our country?s economic | | | | reduce your tax liability, but resist the temptation |
| challenges and the growing Federal deficit will only | | | | because . Facing an IRS audit is not worth it. If you are |
| increase the IRS? desire to impose an IRS income tax | | | | not self employed, home based business deductions |
| audit on you. One things for sure? Our government | | | | become even more problematic. The government will |
| needs money and the IRS is going to get even more | | | | typically assume that most businesses will provide you |
| aggressive in the years ahead to collect as many tax | | | | a place to work, of course that is not always the |
| dollars as they can. | | | | situation for people who work in jobs like outside sales. |
| Although the IRS does not publish their checklist of | | | | 3) another source of IRS audits is your income level. |
| standards on auditing income tax returns, our 25 years | | | | The fact is? the More Money You Make, The More |
| of experience in preparing over 10,000 Federal Income | | | | Likely You Are To Experience An IRS Audit. |
| tax returns for our clients has taught us that there are | | | | Most Americans would love to have to worry about |
| 5 problem areas that if you are sensitive to, can help | | | | making too much, it is well documented from IRS |
| you reduce the risk of a lengthy and potentially costly | | | | records that the more money you make the more you |
| IRS Audit. | | | | increase your chances of you experiencing an IRS |
| So let's get started. | | | | audit. |
| 1) The most common way to get selected by the IRS | | | | This happens for two reasons. The first is that the |
| for an audit is also the easiest to avoid?don?t submit a | | | | more money you earn, the more your income tax |
| sloppy return. You see when you file your tax return | | | | reporting error generally means that there is more |
| with the IRS on of the first things that happen is that | | | | money to be collected by the IRS if they audit you and |
| the IRS will run a series of matching programs on your | | | | find an error. Second, the higher your income, the more |
| tax return. The will check k your math and also verify | | | | likely you are to own a business, multiple homes or |
| all information reported on you by your employer, | | | | rental investment property, investment portfolios, and |
| pension plan, home mortgage and other 1099?s are | | | | additional taxable income. The IRS thinks that the more |
| properly noted on the return . Filing an incomplete or | | | | complex the income tax return, the more likely there is |
| illegible return draws attention and is a warning sign to | | | | to be a mistake. |
| the IRS. A neatly organized and computer generated | | | | 4) Next let?s look at another risk area? - Charitable |
| income tax return reduces the suspicion and need to | | | | Donations |
| investigate the return by an IRS auditor. At Trippon and | | | | The standard for charitable contribution deductions |
| Company CPAs, we have some of the most | | | | historically has been that you can deduct up to $500 |
| technologically advanced federal income tax | | | | without detailed documentation. However, with the |
| preparation software to organize your income tax | | | | recent changes in the tax law, this is no longer true. |
| return so it is presented in a professional and | | | | The IRS has begun to require official documentation |
| organized manner. We know how to properly report | | | | from the charitable organization which received the |
| your activities so that you do not get snared by the | | | | donation, or from the financial institution that funded |
| IRS matching programs. We even have created an | | | | your contribution from your account. As with any tax |
| Audit Protection Plan, offering representation to our | | | | deduction, you should have the proper documentation |
| clients in the event they face an IRS audit. To learn | | | | in the event you face an IRS audit. |
| more about our Audit Protection Plan, contact us at | | | | Another important note for charitable contributions is |
| 713-661-1040. | | | | that if you're making a non-cash donation of property |
| 2) Now let?s look at another audit problem area? - | | | | (such as a car) and the value is over $5,000, you're |
| Home-based Office Tax Deductions. Home-based | | | | required to have an appraisal done on the property to |
| office expenses, whether from your primary income | | | | back-up your claim. |
| source or from a part-time job, are likely targets for | | | | 5) The last area that we will cover in IRS audit risks is |
| IRS audits. If you own a home-based business, you | | | | when you claim - Unusually High Expenses either for |
| definitely need to keep good records. Although it is | | | | your personal tax history or for your income and |
| completely legal to take home based office expenses | | | | occupation. |
| if you are self-employed...it definitely raises your | | | | Deducting excessively high expenses are a huge red |
| chances of being audited. The key here is to only claim | | | | flag that throws up warning signs to an IRS auditor. If |
| deductions on legitimate and well documents | | | | anything seems out of the ordinary or excessive, the |
| expenses. I cannot over-emphasize the need to keep | | | | IRS will feel it necessary to investigate. In the event |
| accurate tax records, receipts, and document anything | | | | that you have any unusual expenses or excessive |
| that is going to be considered a tax deduction. The | | | | deductions, it is always a good idea to send an |
| better you document your business expenses, the | | | | explanation along with your income tax return to avoid |
| easier the claim is to justify during an IRS audit. It might | | | | suspicion and reduce the potential of an IRS audit. |
| be tempting to deduct questionable expenses to | | | | |