Posts Tagged ‘Tax return (United States)’

Oh yeah. I’ve got it.

August 16, 2013

I Got ItWhen the IRS calls and decides that they want to audit your business records, you will want to be sure they are credible long before you get “the letter.”

Credible means that you have receipts and other documents from your suppliers and vendors along with your notes made “at or near” the time of the activity.

And when the Auditor or Agent asks for something, you will want to be able to say “Oh yeah.  I’ve got it.”  That way they know you have excellent records and it could significantly shorten the length and intensity of your audit.

If you have to go home and “find” the records, there is a question as to the accuracy and authenticity because you might have created the records after the IRS asked for them (not that anyone would do that, of course).  Herman Wouk once said “Income tax returns are the most imaginative fiction being written today.” Don’t let this be your return.

Vehicle deductions , travel and meals must also be documented and logged.  The information required for these deductions are specifically referenced in the Internal Revenue Code and are a favorite target of the IRS because most people don’t know what is required and don’t have the required records.

We had a client that thought they didn’t need to keep receipts because they had entered the information into their accounting program.  The IRS disallowed thousands of dollars in deductions because those third party records and the proper notations were not available on the first appointment. And the IRS Agent camped out at our office to check almost everything.

Don’t let this happen to you.  Keep good business records and keep them now to maintain your tax deductions.  Credible records don’t happen by accident.

If you are looking for a simple online record-keeping system that you can use from your smartphone or computer, may we recommend our simple system –  In the time it takes to answer an email, you have done your tax recording.  So simple you can start right now.  Don’t put it off and pay more tax because of poor records or no records.


Meet Your IRS Auditor – The Computer

July 12, 2013

IRS Audit SelectedWith all the news about the Government gathering information on us through the NSA, FBI, CIA, etc., is it any wonder that the IRS is using computers to audit your tax return.  In the past, IRS has “scored” your tax return based on a magical statistical formula to see what is the probability of getting money from you.  They still do that.

But now, in case you haven’t noticed, IRS forms are asking more questions that could be audit triggers.    When you claim vehicle expense for your business – “Do you have evidence to support your deduction?” “If “yes,” is the evidence written?”  What do think happens if you answer NO to these questions.   And how about “Did you make any payments in 2012 that would require you to file Form(s) 1099?” “If “Yes,” did you or will you file required Forms 1099?” Thanks for asking.

And then there is the program that matches W-2s and Forms 1099 to what is reported on your tax return.  And the more detailed reporting of security and stock sales.  And the list goes on.

In the last several years, we have seen a significant increase in the number of computer generated notices that our clients have received.  I have had clients bring in a stack of unopened IRS notices because they just didn’t want to know what was inside.  Not a good idea.  Even if you don’t open the envelopes, you are still responsible for the contents.  And there might be a time clock running which, if missed, could cost you a bundle.

Then Congress, in its infinite wisdom, has made your tax preparer responsible for YOUR tax return and could be penalized for deductions not properly documented.  Do you think that might that limit what you can deduct if you don’t have proper records.  (More on this later.)

If the IRS Computer sent you a notice today, how easy would it be to “send in” your documents to support the questioned deductions?  It could be extremely difficult and cumbersome.  Unless you have a good system.

Shameless plug – we recommend you take a look at for a simple, online system for people who hate accounting and taxes.  It could make your life much easier when you get the “Greetings” from the IRS.

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