McVay Business Services - Accounting & Tax Services Pensacola, FL
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. "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:
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Mike McVay, Tax Accountant Blog
Certified QuickBooks ProAdvisor & Licensed Tax Accountant Pensacola, FL Best Price
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