Love Letters from Uncle Sam

The NEWEST TRENDS in TAX AUDITS…..For the second half of 2010, and especially as we enter 2011, this is what my ‘spies’ tell me we can expect…..

More “Correspondence Audits” – that’s where your favorite Uncle (Sam) sends you a love note ‘asking’ you to ‘clarify’ one or more items on a previously filed tax return.

If you are going to be audited, this is actually the type you hope to get.   The scope is limited to one or a few specific categories, they tell you exactly what records or documentation they want you to provide – and it’s all done by mail.   You never have to look the beast in the eyes, and you can call them any nasty thing you want (not in writing, of course).

What will these audits be focusing on?

– Earned Income Tax Credit
- Large Charitable Contributions
- Home-buyer Tax Credits
- Employee Business Expenses
– Deductions that W-2 employees claim for business expenses that were not reimbursed by their employer.

And, of course, they will also zero-in on the SELF-EMPLOYED. In addition to ongoing scrutiny on Vehicle Expenses and Entertainment, they will also look into Advertising Expenses.

“To be forewarned is to be forearmed.”

You’ve been forewarned, now arm yourself with RECORDS.

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Tagged with: employee business expenses • tax audits • tax credits • tax return

Filed under: Business Tax Tips • Words of Wisdom

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