IRS Tax Issues - Watch Out For What You Claim As Business Expenses Or You Could Owe the Tax Man
Tax Man is Coming: Small Businesses beware.
The IRS has you under a microscope.
Even your tiny IRS related decisions are magnified.
A lot of business owners get greedy and decide to list some personal expenses as business expenses on tax deductions.
But be warned, you will not slip under the radar for long.
The Red Flags: IRS auditors scan tax returns closely.
There are some key red flags that indicate Tax Fraud: - Huge Deductions: If the sum of money you are claiming for your deduction seems ludicrous, the IRS is going to audit your tax return.
- Personal Expenditure: Listing personal expenditure as business expenditure is temping.
But it's also very easy for the IRS to spot.
Luxury items like fur coats, yachts, and extended vacations are obviously not used for business.
And don't try to claim buying these things helped improve your Public Relations, either.
The Green Zone: Here are a few things you can feel safe claiming deductions on.
The IRS states the items you deduct must be both "ordinary" and "necessary" (Publication 535) -Cost of raw materials -Cost for storage -Capital expenses (improvements, start-up costs) -Machinery parts -Tools -Office Supplies Staying on Top: Here's a tip for staying on top: when it comes to business matters, the IRS comes first.
When it come to payments, the IRS comes first.
Think about it.
The IRS is the biggest collections agency in the world.
They have the power to shut you down if you don't comply with their rules.
So follow the IRS's codes and don't get greedy.
Now You Have The Smoking Gun...
Use it!
The IRS has you under a microscope.
Even your tiny IRS related decisions are magnified.
A lot of business owners get greedy and decide to list some personal expenses as business expenses on tax deductions.
But be warned, you will not slip under the radar for long.
The Red Flags: IRS auditors scan tax returns closely.
There are some key red flags that indicate Tax Fraud: - Huge Deductions: If the sum of money you are claiming for your deduction seems ludicrous, the IRS is going to audit your tax return.
- Personal Expenditure: Listing personal expenditure as business expenditure is temping.
But it's also very easy for the IRS to spot.
Luxury items like fur coats, yachts, and extended vacations are obviously not used for business.
And don't try to claim buying these things helped improve your Public Relations, either.
The Green Zone: Here are a few things you can feel safe claiming deductions on.
The IRS states the items you deduct must be both "ordinary" and "necessary" (Publication 535) -Cost of raw materials -Cost for storage -Capital expenses (improvements, start-up costs) -Machinery parts -Tools -Office Supplies Staying on Top: Here's a tip for staying on top: when it comes to business matters, the IRS comes first.
When it come to payments, the IRS comes first.
Think about it.
The IRS is the biggest collections agency in the world.
They have the power to shut you down if you don't comply with their rules.
So follow the IRS's codes and don't get greedy.
Now You Have The Smoking Gun...
Use it!