Richard Ragon Posted December 16, 2013 Report Share Posted December 16, 2013 Show of hands for an IRS audit? I'm willing to bet it's kind of in the nature of our business because there's a heck of a lot of weird write offs. Specifically mine is the travel expenses for 2011. They want to look into why so many miles.. no big deal here.. There's travel for the job, interviews, meeting, research, on and on.. Good thing I'm really OCD about receipts, paperwork, invoices, credit cards.. I keep files for 5 years back (or more). And it really helps when you separate things out like a separate vehicle, separate credit cards, separate accounts, etc. My accountant is most likely going to come with me, just in case.. I had an audit 14 years ago.. The trick is too come up with the government owing you more money.. Then, almost like magic, you can't get a hold of anyone any more at the IRS. My accountant told me that the IRS's audits have quadrupled this year, and I'm sure I'm not going to be the only one here, right? Wish me luck in January. -Richard Quote Link to comment Share on other sites More sharing options...
S Harber Posted December 16, 2013 Report Share Posted December 16, 2013 I was audited twice. 1994 and 95 for similar issues surrounding travel/dive gear/food/ entertainment etc. At the time my work was all over the US and beyond and I was literally on the road about 180 days a year so I had to spend a lot on cold weather gear, food and the like. We were doing a sizable Schedule C at the time as I had yet to incorporate. Both times it went as a No Change after having my accountant go in to represent me. An important facet to this is that you need to give your accountant power of attorney so they can represent you without you being there at the audit. If you go to the audit then the IRS can then start asking questions about any part of your entire return. If there is someone there representing you, then they can only ask about the specific area in question and not deviate from that area. The first time I was very freaked out and fortunately my accountant wisely looked at me and said, "the worst thing that can happen is that you owe them some money." It's scary but not a big problem. Build your paper trail and show up with more than you wrote off just in case some of the write offs are disallowed. Best of luck. Scott Harber Quote Link to comment Share on other sites More sharing options...
studiomprd Posted December 16, 2013 Report Share Posted December 16, 2013 Borg357: " The trick is too come up with the government owing you more money.. " and yet a different possible approach is that when they find something, you don't argue it too hard, and let them get the "win"... remember their motto: "we are the IRS, and we are here to help you" Quote Link to comment Share on other sites More sharing options...
aristotle_kumpis Posted December 17, 2013 Report Share Posted December 17, 2013 As long as you have it all documented, you should be okay. Quote Link to comment Share on other sites More sharing options...
Jim Gilchrist Posted December 18, 2013 Report Share Posted December 18, 2013 +1 on the power of attorney. The last thing you want to do is communicate directly with the IRS regarding an audit. And unless you are trying to commit fraud, like Scott said the worst that can happen is you have to give them some more money. Best regards, Jim Quote Link to comment Share on other sites More sharing options...
Jim Feeley Posted December 18, 2013 Report Share Posted December 18, 2013 Good conversation. And more good info from the lawyers and editors at Nolo: Tax Audits Don't face the IRS on your own. Get tips on how to survive a tax audit, the pros and cons of appealing an audit, and what to expect if you are audited. http://www.nolo.com/legal-encyclopedia/irs-audits Quote Link to comment Share on other sites More sharing options...
RPSharman Posted December 18, 2013 Report Share Posted December 18, 2013 I haven't been audited, but I got a letter about owing money to them. I had received a 1099 listing all my income as salary and not divided up into rents/salary. My accountant separated the income out. The IRS simply thought I ignored the income. I simply had to show where it had been moved. No problem. A friend has been audited a bunch. Each time he was asked, "Do you have proper documentation for all if these dinners, who you spoke with, and about what?" He said he didn't. They gave him a bill and went on their way. If you don't argue they won't dig deeper. Quote Link to comment Share on other sites More sharing options...
studiomprd Posted December 18, 2013 Report Share Posted December 18, 2013 RPS: " If you don't argue they won't dig deeper. " yep, that is an example of letting them have the "win". Quote Link to comment Share on other sites More sharing options...
Richard Ragon Posted December 19, 2013 Author Report Share Posted December 19, 2013 I'm still up in the air about giving my account the power of attorney. My account I think is leaning toward me going. Quote Link to comment Share on other sites More sharing options...
studiomprd Posted December 19, 2013 Report Share Posted December 19, 2013 my CPA once told me if I got sent to the slammer, he'd get me out if it took him the rest of my life! Quote Link to comment Share on other sites More sharing options...
Richard Ragon Posted January 15, 2014 Author Report Share Posted January 15, 2014 IRS audit examination completed.. end result.. IRS owes me money!! The process mainly focuses on mileage, and capital expenses. I had numerous friends in the business tell me they were hit with schedule C inquires too. Fortunately, I walked in with 2 containers of filed receipts and well documented travel and expenses. I learned a bit. While walking out of the IRS building, my accountant leans over to me and says, "you know they'll not be auditing you again for the next decade". p.s. and due to the education I received from this, I'm amending the next year 2012, for another 5K they owe me.. -Richard Quote Link to comment Share on other sites More sharing options...
studiomprd Posted January 16, 2014 Report Share Posted January 16, 2014 the IRS's job is to collect the correct tax! Quote Link to comment Share on other sites More sharing options...
Tyler Faison Posted January 16, 2014 Report Share Posted January 16, 2014 I've been able to be so much more organized since I started using QuickBooks. The spreadsheet thing worked for awhile, but it's so much easier (for me) to keep track of everything now. Especially when dealing with virtual receipts or things purchased online. Quote Link to comment Share on other sites More sharing options...
jason porter Posted January 16, 2014 Report Share Posted January 16, 2014 Be careful not to gloat. The Man is watching! Quote Link to comment Share on other sites More sharing options...
Tyler Faison Posted January 16, 2014 Report Share Posted January 16, 2014 Hah. Famous last words, eh? Quote Link to comment Share on other sites More sharing options...
studiomprd Posted January 16, 2014 Report Share Posted January 16, 2014 did anyone check where Borg's latest post originated from..? Quote Link to comment Share on other sites More sharing options...
Richard Ragon Posted January 18, 2014 Author Report Share Posted January 18, 2014 I'm now in Norway, where I'm adjusting to my new life here.. -Richard Quote Link to comment Share on other sites More sharing options...
Mirror Posted January 18, 2014 Report Share Posted January 18, 2014 Are you a mail order husband now? Quote Link to comment Share on other sites More sharing options...
Richard Ragon Posted January 19, 2014 Author Report Share Posted January 19, 2014 no, mail order sound mixer now. Quote Link to comment Share on other sites More sharing options...
David Lezynski Posted January 21, 2014 Report Share Posted January 21, 2014 I'm a veteran of 5 IRS audits in my career. Most recently 2006, 07, 08. Ow, three in a row. Each audit ended up with the IRS owing me a few rupees. After the last 2008 audit the auditor asked why I keep coming back. He made a notation in a little box and I haven't heard from them since, As far as the Tax man is concerned, 1099/W-9 and multiple W-2 people like us are the thorn in the side of the tax code. We are entitled to most of the deductions enjoyed by the big guys. Somewhere along your career you will be audited. A 9mm to the head is NOT an option....... believe me, the thought crossed my mind. Strong Suggestion #1 Always report all of your income. No fudging here. If you under report, the IRS will consider you fraudulent and MAY review the last 10 years. Strong suggestion #2 Keep every last piece of paper related or unrelated to your profession. Print out On-Line receipts and keep those also. If your bank doesn't send your original checks back or a photo, go to your electronic bank service and print those out too. The IRS loves PAPER at audits. I have a file folder that I drop receipts into each possibly deductible category. Supplies, Office, Van, Union, Gifts, Communications (inc Internet, MiFi, Cable, Cell), Equipment purchase, Professional Services, On Road Expenses. Vehicle/OnRoad diaries are priceless at audit time. If you think you can recreate a vehicle diary, fogettit...... impossible. Also useful for on-road expenses. Do not forget the ever popular M&IE deduction. http://www.gsa.gov/portal/content/104877?utm_source=OGP&utm_medium=print-radio&utm_term=perdiem&utm_campaign=shortcuts Strong suggestion #3 Like the Senator suggests...... call the manufacturer If you do not have a tax adviser, call the IRS and describe, in vague terms, your job, and ask them what you may or may not deduct. They do not need to know who you are or your specific job title. I have found them helpful. 1-800-829-1040 Strong suggestion #4 Home office deduction.... thin ice here, because we earn money with our vehicles and at remote locations. A nice set of photos with all your equipment, office gak, and storage is useful. No beds or refrigerators. Use your good movie making ideas on this one. There's a bunch of deductions in our tax category. Take the time to understand and you will save 10s of thousands of dollars in your career Be careful.... in any electronic communication involving government agencies, I assume that someone is watching and listening. Usual disclaimer.... I am neither a CPA nor an Attorney Quote Link to comment Share on other sites More sharing options...
studiomprd Posted January 21, 2014 Report Share Posted January 21, 2014 David: " in any electronic communication involving government agencies, I assume that someone is watching and listening. " in any electronic communication involving government agencies, I assume that someone is watching and listening. Quote Link to comment Share on other sites More sharing options...
David Lezynski Posted January 21, 2014 Report Share Posted January 21, 2014 Thx Mikey........... too many notes......... and a real pleasure to have a representative of STRUNK & WHITE Quote Link to comment Share on other sites More sharing options...
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