How to survive an IRS audit

29 October 2013 / Uncategorized / Comments Off on How to survive an IRS audit

Welcome to a special Halloween edition of Tuesday Tidbits. We're going to talk about a very scary topic today. I'm your host Charles D. Shapero, CPA with Widget Bookkeeping & Tax, and today we're going to talk about the IRS Audit..(evil laugh) Actually IRS Audits can be very scary, but if you're prepared for them, they don't need to be. When the IRS comes in they're going to want to look at 3 main expenses: Your meals and entertainment, your auto expense and your travel and there's reasons for that. For your auto expense, they're going to want to see your mileage log, and they know that most business owners don't take the time to do their mileage log correctly. What happens, the scariest part of that is, anything you can't prove, you lose. So, they hit that area often. Meals and entertainment: under code section 274 of the Internal Revenue Code, you're suppossed to, on the business receipt write: who you had lunch with and what was the business purpose so they look at all meals and entertainment because they know that most business owners will not take the extra effort to do that documentation. When it comes to travel, how many of us have taken a business trip and tacked on a few extra personal days, and tried to deduct it? Or we travel and take a spouse along. The IRS knows we do things like that, so thats why they audit that. In order to deduct your travel, let's just say I'm going to Vegas for seminar the seminar is a 3 day seminar and I'm out in Vegas for 7 days cause I'm tacking on a few personal days, then I can deduct the three days of lodging while I'm there. I can deduct my entire airine ticket, because I had to go whether I'm going for 3 days or 7 days. But deducting just the business portion, you will withstand an audit everytime. The old saying pigs get fat and hogs get slaughtered, because people try to deduct the whole trip. Likewise, if I bring my spouse, if she is not involved in my business, I can deduct the airfare, but I can't deduct hers. The trick to make audits less scary, is to be prepared. and have your documentation in place. This concludes a very scary Tuesday Tidbits, see you next Tuesday! Widget Bookkeeping and Tax, Know More Keep More

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