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Me and the boys at Automative Training Network generally talk about 2 things, cars and football. In fact for Mark Gilbert ATN founder, I think that he actually loves football more than his own business given the amount that he talks about it. The English […]
Being audited by the Internal Revenue Service (IRS) is a lot like having your math teacher from high school tell you to prove that you’ve come up with the right answer on a test. If you can’t prove it, you fail. Sadly, many taxpayers who find themselves in this situation end up failing because they made critical mistakes when filing their taxes and thus cannot substantiate their original tax-return claims. Let’s take a look at what some of these key mistakes are based on audit defense reviews.
For starters, you can find yourself in hot water with the IRS if you do not report some of your income on your tax return. For instance, you may decide to report the income listed on your W-2 form for your full-time job but omit the income listed on your 1099 form for your freelancing role. However, the IRS will receive a copy of your 1099, so it will eventually discover that you failed to report a portion of your income, which can trigger an audit.
In addition, avoid reporting a large number of business losses on your Schedule C form. You can easily do this if you decide to file a large number of non-business-related expenses as part of your business expenses. As an example, maybe you decide to write off personal clothes and electronic devices. If you do this too often, this may raise red flags with the IRS, which might question how you’re able to stay in business with so many expenses.
Finally, a major mistake that some taxpayers make is using round numbers in their tax-return calculations. The reality is, your true expenses will be less like $100 or $1,000 and more like $99 or $995.50, for example. Stick with your actual figures, decimal points included, to avoid raising eyebrows at the IRS.
You still can’t believe that the Internal Revenue Service (IRS) has decided to audit your tax return. In addition to feeling nervous about the outcome of the audit, you feel confused about what the audit process actually entails. The most recent blog, Part 1 of […]
You’ve always had your son’s best interest at heart, which is why you stashed away extra money in his savings account and college fund when he was a little boy. And it’s why you can’t wait to gift him with your home in the future […]