Today, Donna Blackwell, a local enrolled agent in Mt Juliet, TN is going to talk about eight red flags that could get your business audited by the IRS.
–Transcription–
We’re going to talk about today, why tax returns get corporate audits?
Hi, I’m Donna Blackwell with Personalized Bookkeeping and Tax Services and Tax Debt Relief. I’m enrolled agent and also a certified subject agent. An enrolled agent is someone who has the highest standards to represent someone before the IRS.
One of the reasons is bad math errors that will cause a tax return to be pulled for errors.
Another one is not reporting your income. If you work for someone and you’re a small contractor and you get 1099’s and you didn’t get one. And you only report part of your income, you will get audited and flagged. Always report which you put in the check, in your business bank account. Don’t report just on 1099’s.
Another way that you might get audited if you file a separate Schedule C taxpayer and you report that you received, that you actually paid people to work for you. And you put them down as you have contract labor, but you didn’t send 1099’s out. That’s one, that’s one reason that you will get flagged by the IRS.
Another reason you get flagged by the IRS is rounding up your numbers. Do not round numbers. Don’t estimate, use your actual numbers that you have. Your actual expenses.
Another reason that you can get audited is if you have high mileage. High mileage that’s not to fair mileage people use in a year. Make sure you always keep a mileage log of where you’ve gone to – detailed record.
Another good reason that you would get audited by the IRS is using a dishonest tax preparer. Some dishonest taxpayers will double dip in expenses. For instance, they will use your depreciation on your car plus expenses like fuel, insurance and then also take mileage. That is double dipping. Use a dishonest tax preparer can cause you problems in the future.
Also make sure whoever does your taxes that you pay. They sign the taxpayer. Check their credentials. Go the IRS website and see if they are actual enrolled agent, a CPA or an annual tax preparer filer. This is really good to use someone knowledge, especially if you have small business.
Another way to get audited to is if you claim kids that are not your dependents. You file head of household and you’re not head of household you’re married. You need to prove that these kids that you claim on your taxes are your dependents. You can prove by school records, medical records. Don’t use your cousins kids unless you’ve legit, they’re legitly living with you.
Also another way that you can get audited it or get taken away from you is if you have an S-Corporation. You must have a reasonable salary for an S-Corporation. That is one of the first guidelines. If you have an S-Corporation and you do not have a salary and you have a huge profit on your K-1. That will trigger the IRS that your tax attorneys be audited. Why didn’t you have a reasonable salary? Make sure if you have an S-Corporation you do have a reasonable salary.
This is just a few tips to help save money, not get audit from the IRS. So if you need help, you can give us a call at 615-773-2736 Thank you and you have a wonderful day.