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Showing posts from January, 2015

The Dreaded IRS Audit...The Reality

Updated May 31, 2018

There is a fear of an IRS audit.  People have heard all kinds of stories and have many ideas about what will cause an audit and how to avoid it.  For example some fear that taking a deduction that they are entitled to will make them the target of an IRS audit.  I have also heard clients say both that filing on time will prevent an audit and also that filing an extension will avoid an audit.  So what is the reality of IRS audits.  

Who gets audited and why
The IRS audits aroud 1% of tax returns they receive.  That sounds like random selection but there are things that increase your chances of selection.  Ordinary taxpayers with ordinary income and deductions if audited are usually just a random and very unlikely selection.  In fact none of my cleints that can be described this way have ever been randomly selected for an audit.  Most audits are triggered by the unusual or areas of suspect by the IRS.  The IRS itself indicates there are randomly selected audits but m…

Business Tax Credits: The Research and Development Tax Credit

Business Credits
Business credits are not just for the big boys like Apple, Inc. and Google, Inc. but they can mean thousands of dollars for your business. Business credits are not widely discussed nor is much information published by the IRS on the subject. As a result many businesses are "leaving money on the table". If you own a business you do well to find a CPA that has working knowledge of business tax credits.

For example, does your business have research and development expenses for developing new products? If so it is likely that your business qualifies for the Research and Development Tax Credit. In Amy Feldman's recent article in Inc. "The Essential Startup Guide to Tax Time" she mentioned a situation where an app developer discovered that they qualify for the research and development tax credit. They found by amending their prior three years of tax returns for the credit that they got $30,000 in taxes back. To my small business clients that qualif…

Obamacare and My Tax Return: What Do I Need to File?

The time has come to file your 2014 U.S. income tax return and you need to know what you need for the Obamacare (The Affordable Care Act) filing requirements.

In many cases it will be simple.

If you had the required coverage you simply check the box on your tax return (1040 line 61) and you are done. If you are not required to file a tax return you will not need to file to claim an exemption.  Here is the quote from the IRS: "No. If you are not required to file a federal income tax return for a year because your gross income is below your return filing threshold, you are automatically exempt from the shared responsibility provision for that year and do not need to take any further action to secure an exemption. If you are not required to file a tax return for a year but file one anyway, you will be able to claim the exemption on your tax return."
If you are a dependent on someone else's tax return you should not have any reporting requirement for Obamacare (The Affordabl…

Things That Will Make You Money - Number 17 - Be Aware/Open to Opportunities

Really successful people do things that other people will not do.  One very important thing they do is to keep themselves open to and aware of opportunities.  This is like going from being closed off to just one room in your house and opening the door and finding the possibilities in all the other rooms. Sometimes in our mind we limit ourselves to where we are and get closed off to other opportunities that are open to us.

Open to Other Possibilities What happens is we start to think only certain things are possible for us. As opposed to identifying what we want to achieve and working toward it, we let others or that voice in our own head tell us what we can and should do. Personally I do not like to do what most of the world is doing and I don't like limiting myself.  But in reality sometimes I get closed off because of what is going on in my head. It is a fight we all face. The question for each of us is do we just continue with the ideas we have been conditioned to or do we cha…