CORONAVIRUS STIMULUS CHECKS: WHAT TO EXPECT * Required Up to Date Tax Filings to Receive Check.3/25/2020
Congress is gearing up to send out stimulus checks to Americans across the country to combat the recession being created by the coronavirus pandemic. With stores, restaurants, and more being closed, and most other Americans forced to work from home, the country is gearing up for a recession or depression that is hasn't seen in almost a century. With lessons learned from the Depression and Great Recession, one of the biggest ways to stimulate the economy and keep American's financially safe is to simply give them cash to spend - to pay rent, buy food, and take care of their families. Let's look at the history of stimulus checks, and give you an idea of what to expect, how to prepare, and what you should seriously consider spending your stimulus check on given what we've learned from history. Note: An agreement was reached to include stimulus checks in the bill overnight on March 24. We will update with any changes when we see the official text of the law. We can get your tax filings up to date quickly so you can get your stimulus check. We can do past year returns up to 7 years back.
Did you know that 40 million people used Turbo Tax last year to file their taxes online? How many more used a different online software? Why are so many using a computer system that’s unsympathetic to their specific situation? The answer.... Marketing! Turbo Tax spends a lot of money year-round on marketing to make filing taxes with their software seem easy. As a seasoned Tax Professional you know that filing taxes is anything but easy. Rather, it can be a daunting task because each return represents an individual, or family, and their specific situation. So how do you get people to file with you vs. Turbo Tax? Easy, beat Turbo Tax at their own game by marketing yourself year-round as a trusted source of information and someone that can empathize with each individual’s specific situation. Turbo tax ask questions and based on your understanding and perspective it decides for you the outcome of its entries. This is AI deciding your tax outcome. A seasoned long time tax professional is always the best choice. 
 The Tax Break the IRS Is Begging You to Take
Millions of taxpayers are eligible but choose not to claim the thousands of dollars this tax credit offers. Most Americans' goal during tax season is to pay as little tax as possible, and ideally to get a refund that's as large as you can get. Unfortunately, preparing taxes is complicated, and the complex laws governing taxation are so challenging to navigate that many taxpayers end up not claiming tax breaks that could put thousands of extra dollars in their pockets. It might come as a surprise to learn that the IRS actually wants to encourage taxpayers to take tax breaks, but that's exactly what it's doing on Jan. 31. With the 14th installment of its annual EITC Awareness Day, the tax agency wants to make sure everyone knows about the benefits of claiming the earned income tax credit -- a tax break that it believes 6 million eligible taxpayers leave untouched. Image source: Getty Images. How does the earned income tax credit work? The EIC Credit helps workers with modest income levels save on their taxes. For the 2019 tax year, credit amounts can be up to $6,559 for taxpayer families with three or more children, and smaller limits of $5,828, $3,526, and $529 apply to those with families of two, one, or no children, respectively. Below, you'll see the income limits that apply to the credit for 2019, putting an upper bound on how much money you can make and still receive a portion of the credit amount. Filing Status Income Limit if No Children Income Limit if 1 Child Income Limit if 2 Children Income Limit if 3+ Children Single, head of household, or widowed $15,570 $41,094 $46,703 $50,162 Married filing jointly $21,370 $46,884 $52,493 $55,952 Data source: IRS. Best of all, the earned income credit is a refundable credit. That means that even if you otherwise wouldn't owe any tax, you can still file a return and get a refund back that includes the credit amount. That's a fairly unusual tax break, and it's one that can sometimes justify filing a tax return even if you wouldn't ordinarily be required to do so. Why is the IRS promoting the earned income tax credit? The sad thing about the earned income tax credit is that so many people don't choose to claim it. The IRS estimates that 25 million taxpayers received the earned income tax credit last year, with the average amount received coming in just over the $2,500 mark. However, one out of every five eligible taxpayers failed to claim and receive the credit. Doing the math, that leaves roughly 6.25 million taxpayers having missed out. IRS Commission Chuck Rettig explained the rationale for the IRS outreach effort: The EITC is a vital tax credit that helps millions of hard-working working families around the nation. It's critical that people review the credit to see if they qualify. Increasing awareness about the EITC is important, and the IRS is proud to support the ongoing efforts by partner groups across the country for sharing this critical information with taxpayers. In particular, the IRS identified several groups of taxpayers who are most likely to miss out on the credit. They include the following:
If you qualify for the earned income tax credit, make sure that you claim it. There's no reason to pass up hundreds or even thousands of dollars added to your tax refund. The IRS EITC Website provides a tool to help you figure out if you qualify and what the amount of your credit would be. With even the IRS wanting you to take advantage of the credit, it's worth the time as you're preparing your 2019 tax returns to check and see if you qualify. McVay Business Services Mike McVay, Tax Accountant 5336 N Blue Angel Pkwy Pensacola, FL 32526 850-725-5696 Mike@MikeMcVay.com
 Link to the new I.R.S 2020 W-4 Withholding Calculator
A Warning about Turbo TaxMore and more people are seeing I.R.S Audits when they have used Turbo Tax to prepare their taxes. They may also get a surprise with the bait and switch that Intuit uses when they lure you into the FREE tax filing gemick. Remember TURBO TAX is NOT Free. Well it is, but if you have more than just a W-2 you will have more forms and have to pay anywhere between 39.95 & 250.00. The audit protection is a joke with Turbo Tax as they only cover if the actual calculation are incorrect. Well its software so the calculations will never be wrong, yet it will allow you to take deductions and credits you are not entitled to if you interpret the questions incorrectly. This is from a client that came to McVay Business Services last year after spending days and days working with Turbo Tax. After his nightmare she received 2 letters from the I.R.S stating his return was incorrectly prepared. A TurboTax Seminaro I don't want any of you to fall into. I went to file my taxes yesterday the same way I have done for several years, with the TurboTax free file. I noticed a few things that I thought I'd share: When I got to the section for the child and dependent care credit, the software kept telling me that I don't qualify. I knew that I still qualified for the credit so I googled it. Turns out, when you enter your W2 at the beginning for you and your spouse, it defaults both of them to one persons name (so it appeared that I made too much money for the credit, while my husband had no income). As soon as I went back and assigned one of the W2 to my husband I qualified for the credit, which boosted my refund by $600. Because I filed for a specific credit, TT software said I needed to pay the $39.99 as the free software didn't cover one of the forms I'd need done to file. I was already finished by this point and was getting money back so I figured ok, I'll pay it, and that I will just file by hand next year. TT gave me the option to pay this fee out of my refund, saying something like "no need to reach for your wallet, we can just take this from your refund". Nowhere on this page did it indicate that there would be a fee to do so. When I was completely done and ready to file, TT asked me to consent to the charges and hit submit. I noticed that the fees suddenly went from $39.99 to 79.99 and I didn't understand why until I searched the internet and found dozens of complaints from last year. Apparently TT is charging an extra $39.99 in order for them to take the original fee from your return with very little explanation and quite deceptive language on their website. I paid the original fee with my credit card and filed without issue. I know this is a bit strange and I am not trying to blast TT in general, but I do think it is fair that people be aware of these fees and quirks of the software. Hope this helps someone! After filing, I received 2 letters from the I.R.S, said I owed another $2,174.00 with penalties and interest. After finding Mr. McVay, Tax Expert in Pensacola, FL I found that several of the questions Turbo Tax ask was ambiguous and I guess I thought my answer should be different. When I called Intuit for help they said they only guarantee the calculations are right and that I am on my own when it comes to the questions that Turbo Tax ask. Well, its bye bye to Turbo Tax. Mr. Mike McVay, Tax Accountant not only corrected my return but was able to abate all the penaities associated with the I.R.S and set-up a payment plan so I can pay monthly for this extra tax I was not expecting to owe. I will always from now on use a local Pensacola Tax professional to prepare all my income taxes. Pensacola FL Tax - McVay Business Services 5336 n Blue Angel Pkwy Pensacola, FL 32526 850-725-5696  Preparing for year-end closeout of your business bookkeeping can be a daunting task. McVay makes it simple. In December you can receive our year-end discounts if you use our QuickBooks Review and year-end close out services. Contact us for appointments between December 1st and December 23rd. We can work remotely or I can visit your office. Free evaluation of your QuickBooks Data is available. If your required to send 1099's for 2019 for anyone making over $600.00 I can help. We have a full e-file 1099 system that not only sends your recipients but will efile with the IRS. You must reserve this service prior to December 31st. Tax Filing Starts January 21st 2020.
What is the IRS Fresh Start Program? The IRS Fresh Start Program is a program that is designed to allow taxpayers to pay off substantial tax debts affordably over the course of six years. Each month, taxpayers make payments that are based on their current income and the value of their liquid assets. By the end of six years, their tax debts should be paid off in full. Get help today - Free Consultation 850-725-5696. This program simplifies the process of paying back hefty tax debts. It also helps people avoid many of the detriments of owing a tax debt to the IRS including:
The IRS initiated its Fresh Start Program in 2012 and expanded it in 2017 to ease the financial burdens of taxpayers who owe up to $50,000 in taxes. It is available to both business owners and individual taxpayers. Moreover, the premise of its design took into consideration the hardships faced by people who experience circumstances like unemployment. Taxpayers who are unemployed for longer than 30 days may be eligible to have their IRS penalties waived. They also could have request a six month extension to file and pay their taxes without fear of costly IRS penalties. Repayment Options under the IRS Fresh Start Program The IRS Fresh Start Program offers three repayment options to taxpayers. All three options allow people to pay off their tax debts legally and satisfactorily. They also allow people to avoid further penalties and interest that could cause undue financial hardships. The first option available to people is called an extended installment agreement. An extended installment agreement is designed for people who owe $50,000 or less to the IRS. It grants taxpayers up to six years to pay off what they owe without incurring additional penalties and interest. It also stops IRS collection activities like wage garnishments, tax liens, and seizure of assets. This option is one of the most commonly utilized under the IRS Fresh Start program. The payments that taxpayers make each month will be based on how much money they currently make along with the value of the assets they have at their disposal. The payments are designed to be affordable so taxpayers can make them on time and without financial difficulties each month. Mike McVay, IRS Fresh Start Program Authorized - 850-725-5696 Mike@MikeMcVay Back taxes are not an issue at our firm! 
 Why a Qualified Tax Professional can save you more tax dollars and headaches than Turbo Tax.10/26/2019
The Cons of using Turbo Tax:
Why Hire a Tax Professional?
5336 N Blue Angel Pkwy Pensacola, FL 32526 850-725-5696 Mike@MikeMcVay.com See if you qualify for IRS hardship relief |
 Bookkeeping takes up more time than you can afford! | If your business is growing, you can only get away with Do-It-Yourself bookkeeping for so long. Maybe you have a really great spreadsheet template you found online. Maybe you even shelled out for some accounting software. But as your business expands and your financials get more complex—you’re going to get up one day, look at yourself in the mirror, and say, “I need to hire a bookkeeper.” While there’s no hard-and-fast rule to when you should bring on hired bookkeeping help, there are some common, telltale signs that entrepreneurs experience just before they reach the tipping point. If you’re suffering from any of the following symptoms, it’s probably time to hire a bookkeeper. |
According to a Gallup poll, 39% of small business owners work more than 60 hours a week.
Don’t take your own time for granted. Not only does overworking lead to burnout, but every minute you spend on a task has a dollar equivalent.
First, start tracking how much time you spend per week on bookkeeping. Then, using an online calculator, determine how much your time is worth, and figure out how many “dollars” you spend on bookkeeping per month.
QuickBooks Services
Compare your “salary” as your own bookkeeper against the price of professional bookkeeping. Once you treat the time you spend bookkeeping as an actual expense in cash, you’ll have a better idea of whether you should keep doing it.
Don’t take your own time for granted. Not only does overworking lead to burnout, but every minute you spend on a task has a dollar equivalent.
First, start tracking how much time you spend per week on bookkeeping. Then, using an online calculator, determine how much your time is worth, and figure out how many “dollars” you spend on bookkeeping per month.
QuickBooks Services
Compare your “salary” as your own bookkeeper against the price of professional bookkeeping. Once you treat the time you spend bookkeeping as an actual expense in cash, you’ll have a better idea of whether you should keep doing it.
Your books are never up to date
When you fall behind on bookkeeping, your books stop reflecting the actual state of your finances. That makes it harder (sometimes impossible) to understand cash flow and accurately gauge the health of your business.
For instance, if your Cost of Goods Sold (COGS) hasn’t been updated in six months, you can’t subtract if from your revenue in order to determine how much profit you’ve earned in that time.
Which means you’re blind to how much money you’re actually making—and the steps you can take to increase your income.
Contact Us
What’s more, if your books aren’t up to date, you’ll have a ton of catch up bookkeeping to do during tax season, making a typically stressful time of year even more difficult.
With a qualified bookkeeping solution, you can expect to receive monthly financial statements, so you’ll know where your money is going to and coming from.
You missed out on tax write-offs
Suppose you just found out that, since your home is more than 50 miles from your place of work, you’re allowed to deduct some of the cost of commuting.
That’s great news. Only, now you’re thinking about all the years you spent without filing this deduction, the extra money you could have saved, and how you could have spent it. Images of an in-ground pool dance in your head.
The sooner you know about small business tax deductions, and the sooner you take advantage of them, the sooner you’ll benefit.
Part of a bookkeeper’s job is to take every business expense you incur and categorize it properly. In the process of doing so, they’re able to spot obvious deductible expenses such as mileage.
Ultimately, an accountant with experience in your industry is most qualified to give you comprehensive guidance regarding tax write-offs. But many business owners only talk to their accountants during tax season. A good bookkeeper who understands your business’s needs can help you out during the rest of the year.
Mike McVay, QuickBooks Accountant (Certified) with his CFO services covers all your bookkeeping, accounting, payroll and tax filing obligations with reasonable rates for small business.
Call Mike @ 850-725-5696
Mike@MikeMcVay.com
When you fall behind on bookkeeping, your books stop reflecting the actual state of your finances. That makes it harder (sometimes impossible) to understand cash flow and accurately gauge the health of your business.
For instance, if your Cost of Goods Sold (COGS) hasn’t been updated in six months, you can’t subtract if from your revenue in order to determine how much profit you’ve earned in that time.
Which means you’re blind to how much money you’re actually making—and the steps you can take to increase your income.
Contact Us
What’s more, if your books aren’t up to date, you’ll have a ton of catch up bookkeeping to do during tax season, making a typically stressful time of year even more difficult.
With a qualified bookkeeping solution, you can expect to receive monthly financial statements, so you’ll know where your money is going to and coming from.
You missed out on tax write-offs
Suppose you just found out that, since your home is more than 50 miles from your place of work, you’re allowed to deduct some of the cost of commuting.
That’s great news. Only, now you’re thinking about all the years you spent without filing this deduction, the extra money you could have saved, and how you could have spent it. Images of an in-ground pool dance in your head.
The sooner you know about small business tax deductions, and the sooner you take advantage of them, the sooner you’ll benefit.
Part of a bookkeeper’s job is to take every business expense you incur and categorize it properly. In the process of doing so, they’re able to spot obvious deductible expenses such as mileage.
Ultimately, an accountant with experience in your industry is most qualified to give you comprehensive guidance regarding tax write-offs. But many business owners only talk to their accountants during tax season. A good bookkeeper who understands your business’s needs can help you out during the rest of the year.
Mike McVay, QuickBooks Accountant (Certified) with his CFO services covers all your bookkeeping, accounting, payroll and tax filing obligations with reasonable rates for small business.
Call Mike @ 850-725-5696
Mike@MikeMcVay.com
| Budgeting needs to include paying yourself too “I think they should start by figuring out what their pay rate should be: Start by understanding your personal economics and what you require first and then try to back engineer your minimum salary into how much your business needs to make in sales in order to break even and pay yourself,” suggests Duran. “Don’t leave yourself out. Then figure out the fixed expenses, including your salary, and then variable costs and build from there.” |  |
Keep tracking simple
QuickBooks is by far the best option for any small to medium size business. McVay has customized plans starting at only $99.00 per month that would take the burdensome details of running a business. McVay does most or all of the data entry, downloads, adjustments, reconciliations, month end close out and financials for a very reasonable price. Leaving you to increase revenues and profits. Mike McVay is a Certified QuickBooks ProAdvior located in Pensacola, FL. He works with clients all over the USA.
QuickBooks is by far the best option for any small to medium size business. McVay has customized plans starting at only $99.00 per month that would take the burdensome details of running a business. McVay does most or all of the data entry, downloads, adjustments, reconciliations, month end close out and financials for a very reasonable price. Leaving you to increase revenues and profits. Mike McVay is a Certified QuickBooks ProAdvior located in Pensacola, FL. He works with clients all over the USA.
Ask for help
McVay has streamlined the bookkeeping process to allow for lower cost when doing your daily, weekly or monthly bookkeeping task. A good accountant will always offer good business and tax advice to keep you on the right track. Some accountants will offer free or included advice and consultations if you are a regular monthly client.
McVay has streamlined the bookkeeping process to allow for lower cost when doing your daily, weekly or monthly bookkeeping task. A good accountant will always offer good business and tax advice to keep you on the right track. Some accountants will offer free or included advice and consultations if you are a regular monthly client.
Invest in yourself and your future, not just your business
“Entrepreneurs should remember that they are their own bosses, and what these means is that they need to be their own motivator and remember to plan for the future,” shares McVay. “This is a very common mistake that people make as they leave the workforce to start their own venture, or even when starting from scratch after college. I many times see how they overlook the importance of setting their own benefits such as: proper health and life insurance coverage, retirement accounts and other flexible spending accounts.” among others. A good accountant or financial advisor can help you choose the right path.
“Entrepreneurs should remember that they are their own bosses, and what these means is that they need to be their own motivator and remember to plan for the future,” shares McVay. “This is a very common mistake that people make as they leave the workforce to start their own venture, or even when starting from scratch after college. I many times see how they overlook the importance of setting their own benefits such as: proper health and life insurance coverage, retirement accounts and other flexible spending accounts.” among others. A good accountant or financial advisor can help you choose the right path.
Keep up with other great business ideas by visiting our blog. Mike McVay, Certified QuickBooks ProAdvisor and Tax Consultant. 850-725-5696 * Mike@MikeMcVay.com
 Bookkeeping makes tax filing less complicated. When tax season rolls around and you must provide your accountant with the necessary documents for filing business taxes, having clean books substantially cuts down on the time it takes to prepare tax documents. Rather than rummaging through your business receipts, the accountant can focus on finding possible tax deductions, saving their time and your money.  | Bookkeeping provides key insights into the overall health of a business. Bookkeeping enables businesses to produce financial statements, which collect financial data and paint a clear picture of how your business is really doing. These statements help you manage cash flow, which is essentially how much cash is coming in and leaving your business at a given time. Cash flow projections are pivotal to the growth of a business, as they can entice potential investors and satiate existing ones. Understanding your business’s financial health eases making future plans involving hiring, expansion, and day-to-day operations. Financial statements, such as your balance sheet or income statement, give you the information you need to make decisions from an informed perspective rather than a taking a gamble. Bookkeeping lessens the pain of an audit. Businesses always run the risk of one day being audited. While it’s not something to look forward to, it’s definitely worth preparing for. Having all your bookkeeping organized and in one place will make it easier to retrieve your business’s financial information and can help avoid penalties or late fees. |
When it’s time to outsource
There are an abundance of reasons it might be time for you to outsource, whether it’s assistance with driving growth or if you’re just struggling to keep up with these tasks on your own.
Outsourcing bookkeeping and accounting tasks come with a ton of benefits, like improving data security, increasing valuation, and saving time. Regardless of how in-tune you are with your business, financial guidance makes it significantly easier to discern the best next steps to meet your specific and unique goals.
If you own a new or small business, it doesn’t necessarily make sense to hire a full-time accountant, which will cost you. That doesn’t mean, however, you have to do it all on your own. Bookkeeping and accounting are challenging skill sets to learn, and it’s important that your business’ books and accounting are done right so you can make smart decisions and grow healthfully.
What is Outsourcing?
When you outsource anything, you’re giving specific business operations to a company outside of your own.
It may seem odd. After all, if you started your own business, why would you want anyone else to have a part in it?
The reality is that finance and accounting outsourcing (or FAO) has steadily become more and more popular in the business world for many years now.
In fact, as of 2018, nearly $33 billion is spent worldwide on outsourcing finance and accounting processes.
It has grown nearly 25 percent in the past five years and doesn’t show any signs of slowing down.
As odd of a concept as it may seem, it’s certainly nothing to scoff at.
Mike McVay, Accountant - 850-725-5696
Mike@MikeMcVay.com
There are an abundance of reasons it might be time for you to outsource, whether it’s assistance with driving growth or if you’re just struggling to keep up with these tasks on your own.
Outsourcing bookkeeping and accounting tasks come with a ton of benefits, like improving data security, increasing valuation, and saving time. Regardless of how in-tune you are with your business, financial guidance makes it significantly easier to discern the best next steps to meet your specific and unique goals.
If you own a new or small business, it doesn’t necessarily make sense to hire a full-time accountant, which will cost you. That doesn’t mean, however, you have to do it all on your own. Bookkeeping and accounting are challenging skill sets to learn, and it’s important that your business’ books and accounting are done right so you can make smart decisions and grow healthfully.
What is Outsourcing?
When you outsource anything, you’re giving specific business operations to a company outside of your own.
It may seem odd. After all, if you started your own business, why would you want anyone else to have a part in it?
The reality is that finance and accounting outsourcing (or FAO) has steadily become more and more popular in the business world for many years now.
In fact, as of 2018, nearly $33 billion is spent worldwide on outsourcing finance and accounting processes.
It has grown nearly 25 percent in the past five years and doesn’t show any signs of slowing down.
As odd of a concept as it may seem, it’s certainly nothing to scoff at.
Mike McVay, Accountant - 850-725-5696
Mike@MikeMcVay.com
 | Many business owners are now engaging a BPO or "Business Process Officer" to oversee the complete financial and payroll process of small businesses. The benefit of having a trusted BPO in the background allows you to focus on growing your business and profits and not stressing over paperwork, QuickBooks, taxes or payroll. |
Outsourcing becomes more and more popular these days, as more companies all over the country are turning to different advisors for outsourcing their business activities, and it’s no wonder. There are many advantages of outsourcing, and in today’s economy, it becomes a common practice. Most small business owners need to focus on their business operations, customers and profits, not paperwork and computer entry.
Here are some benefits of using a BPO (Outsource Business Process Officer)
Reduced operating costs
If you figure your lost productivity and what it cost if your doing these task in house the cost benefits of outsourcing your bookkeeping is huge. Cost are much lower than you may think. Some accountants such as Mike McVay @ HomeMcVay Business Services use the latest technology to accomplish these taxes. Reducing your cost and increasing your small business profits.
Focus on the core areas of the business
The most obvious and prominent benefit remains the fact that it saves money. Many of the companies and individuals that provide outsourcing services can get your job done at a lower cost
Skilled professionals
The biggest issues companies confront in their customer success programs is not collecting the data, but efficiently acting on it. This is the distinct skill set that specialized companies have been very successful in performing.
Access to the right toolsOutsourcing rules out the need for infrastructure costs as the outsourcing partner takes care of the business processes and therefore develops the infrastructure needed for providing successful accounting and payroll programs.
Thorough analysis and reportsA thorough analysis of your business journey is essential when it comes to analyzing the data and then following that with action. McVay provides custom application, reports and consulting to keep you a step ahead of the competition.
Many new businesses can start this full service accounting, bookkeeping, tax and payroll services for $150.00 per month. Discount pricing for all clients on monthly QuickBooks Online Subscriptions.
Mike McVay, Certified BPO - Certified QuickBooks ProAdvisor - Licensed Tax Return Preparer
850-725-5696
5336 N Blue Angel Pkwy Pensacola, FL 32526
Mike@MikeMcVay.com
Stop the stress! McVay's Business Bookkeeping and Tax Services awarded best service and price in Pensacola,FL for multiple years in a row. Let us do all the work so you can focus on growing your business. Small Business Bookkeeping starting at $99.00 per month. 1/2 Price QuickBooks Online Subscriptions! Mike McVay, Certified QuickBooks ProAdvisor.
Mike@MikeMcVay.com * 850-725-5696
Mike@MikeMcVay.com * 850-725-5696
 | An IRS audit takes place when the Internal Revenue Service chooses to review a taxpayer's accounts to verify that tax laws are being followed. Audits aren't terribly common: Only 0.6 percent of individual returns were examined in the 2017 fiscal year, according to the IRS. But filing your return completely, accurately and honestly can reduce your chances of being pinpointed and increase the odds of a favorable outcome. |
According to 2017 fiscal year statistics from the IRS, individual filers who made between $200,000 and $1 million were audited at a 0.8 percent rate. If they were business owners, that rate was 1.6 percent. Those earning more than $1 million were audited at a 4.4 percent rate. If you're a high earner, be aware that you may hear from the IRS. Consider using some of that income to hire an experienced tax preparer in Pensacola, FL like Mike McVay, Tax Accountant.
"Cryptocurrency is going to be an emerging issue with the IRS," says Phyllis Jo Kubey, enrolled agent and certified financial planner in New York City. "A lot of people don't know that when they buy something with cryptocurrency, it’s a taxable transaction." If you're receiving bitcoin as income or successfully mining it, for example, these transactions may need to be reported. The IRS receives information from digital currency wallet Coinbase and may apply increased scrutiny to your tax return if it doesn't reflect the data provided.
"Unless something is specifically exempt from being taxable income, it is income and you're supposed to report it," Kubey says. The IRS gets its own copies of the 1099 and W-2 income forms you have received and may notice your omissions. Track down any tax forms that have gotten waylaid or lost in the mail and contact a tax preparer if you're not sure about which earnings count as taxable income.
CREDITYou made typos or a math error.
It might be an honest mistake, but if something looks fishy, such as an incorrect Social Security number or calculations that don't add up, you may bring on additional scrutiny from the IRS. Be careful and check your work twice when filing taxes.
CREDITYou aren't reporting cryptocurrency.
"Cryptocurrency is going to be an emerging issue with the IRS," says Phyllis Jo Kubey, enrolled agent and certified financial planner in New York City. "A lot of people don't know that when they buy something with cryptocurrency, it’s a taxable transaction." If you're receiving bitcoin as income or successfully mining it, for example, these transactions may need to be reported. The IRS receives information from digital currency wallet Coinbase and may apply increased scrutiny to your tax return if it doesn't reflect the data provided.
CREDITYou made typos or a math error.
It might be an honest mistake, but if something looks fishy, such as an incorrect Social Security number or calculations that don't add up, you may bring on additional scrutiny from the IRS. Be careful and check your work twice when filing taxes.
CREDITYou aren't reporting cryptocurrency.
"Cryptocurrency is going to be an emerging issue with the IRS," says Phyllis Jo Kubey, enrolled agent and certified financial planner in New York City. "A lot of people don't know that when they buy something with cryptocurrency, it’s a taxable transaction." If you're receiving bitcoin as income or successfully mining it, for example, these transactions may need to be reported. The IRS receives information from digital currency wallet Coinbase and may apply increased scrutiny to your tax return if it doesn't reflect the data provided.
"Unless something is specifically exempt from being taxable income, it is income and you're supposed to report it," Kubey says. The IRS gets its own copies of the 1099 and W-2 income forms you have received and may notice your omissions. Track down any tax forms that have gotten waylaid or lost in the mail and contact a tax preparer if you're not sure about which earnings count as taxable income.
Business owners may attract additional scrutiny from the IRS. Uncle Sam tended to examine the returns of self-employed filers at higher rates than it did comparable nonbusiness filers, according to IRS data. If you claim self-employment income and deductions through your individual income tax return, double- and triple-check your figures and keep a pristine paper trail to back up tax deductions. Tax Services can help create an audit trail. Certified QuickBooks ProAdvisors like McVay Business Services in Pensacola, FL can help organize your books.
For self-employed filers who have reported losses for three consecutive years, "that does create a potential audit risk because the IRS will challenge that to see if it’s a business or it's a hobby," says Dave Fultz, a partner with Barsz Gowie Amon & Fultz, located outside Philadelphia. The important difference: "A loss from a business is deductible. A hobby loss is not," he says.
Be specific when itemizing various expenses, Fultz says. If the numbers all end in a double zero, it can look fishy. "The IRS does look at that, and they might feel you don't have documentation for your expenses," he says. Again, keep good records and be specific when writing off expenses.
When listing the business use of a work-related automobile, the IRS knows that it's unlikely that you're using it 100 percent for work. For example, if you use it for commuting, that expense isn't deductible. There are myriad mobile apps and tools to help you track mileage. Maintain your paper trail. Turbo Tax has the greatest audit chances, because of past audits this software is known to be a treasure trove of mistakes based on I.R.S auditors. Claims of 60% of Turbo Tax users will be audited within 3 years of filing.
As long as you file taxes accurately and keep good records, you shouldn't fear a tax audit. "At the end of the day, honesty is the best policy," Fultz says. "As long as you have support for everything you put on the return, even if you are audited, it’s OK." If you're concerned about your tax return or the paperwork involved, meet with a good tax preparer and make sure you keep accurate records throughout the year.
To recap, here is what triggers a tax audit:
- You earned a lot of money.
- You aren't reporting cryptocurrency.
- You are self-employed.
- You failed to report taxable income.
- You made typos or a math error.
- You have three consecutive years of business losses.
- You use round numbers.
- You deduct 100 percent of a business car.
- Something doesn't add up.
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Mike McVay, Tax Accountant Blog
Certified QuickBooks ProAdvisor & Licensed Tax Accountant Pensacola, Fl
Certified QuickBooks ProAdvisor & Licensed Tax Accountant Pensacola, Fl
Author
Mike McVay, Accountant -Experienced IRS Tax Resolution Specialist
With over 20-years experience working with individuals, families & small business owners allows me to share helpful information and long term knowledge to help with their income tax, I.R.S tax issues and businesses.
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