1. What is THE unpardonable sin in an IRS audit?
Suppose you just received that lovely letter from the IRS telling you that you are the subject of an IRS audit.
What ONE record receives special attention?
What ONE record can create a nightmare for you if you did a sloppy job?
Suppose you just received that lovely letter from the IRS telling you that you are the subject of an IRS audit.
What ONE record receives special attention?
What ONE record can create a nightmare for you if you did a sloppy job?
2. What ONE record makes the IRS suspect that you are the keeper of lousy records?
Think of the record people MOST hate keeping.
That’s the one I'm talking about.
You have probably guessed what that record might be.
And it's a huge red-flag for the IRS Examiner
Think of the record people MOST hate keeping.
That’s the one I'm talking about.
You have probably guessed what that record might be.
And it's a huge red-flag for the IRS Examiner
3. Once your audit examination begins, the examiner likes to see this record.
If the record is missing or lacking, the IRS examiner knows that your other records probably are lacking, too.
If the record is missing or lacking, the IRS examiner knows that your other records probably are lacking, too.
4. This record—the one you probably hate keeping—is the mileage log on your vehicle or vehicles.
The IRS notes that a taxpayer’s failure to keep a mileage log on vehicles indicates that the activity under examination is not being conducted in a businesslike manner.
The IRS notes that a taxpayer’s failure to keep a mileage log on vehicles indicates that the activity under examination is not being conducted in a businesslike manner.
5 You have to do as the tax form says to stay out of trouble:
As a one-owner or husband-and-wife-owned business, regardless of whether it’s a corporation, a partnership, or a proprietorship,
you file a tax form that asks you for the following information about your vehicles:
As a one-owner or husband-and-wife-owned business, regardless of whether it’s a corporation, a partnership, or a proprietorship,
you file a tax form that asks you for the following information about your vehicles:
6.: A. Do you have evidence to support the business/investment use claimed? (If “yes,” is the evidence written?)
B.List your total business/investment miles on each vehicle.
C.List your total commuting miles on each vehicle.
D.List your total personal miles on each vehicle.
B.List your total business/investment miles on each vehicle.
C.List your total commuting miles on each vehicle.
D.List your total personal miles on each vehicle.
7. IRS Form 4562 has columns for answers to the above questions for up to six vehicles used by either a sole proprietor or an owner of more than 5 percent of a corporation, a partnership, or another entity.
8. The mileage log is the record of proof that you need to use for your answers to the tax form questions.
So, make sure you do what the audit requires DAILY so you're ready if they ever come knocking.
So, make sure you do what the audit requires DAILY so you're ready if they ever come knocking.
9. Like I teach in my tax class:
1. Be agressively discreet.
2. Get in the habit of keeping good records.
And your mileage record is one of THE simplest records to keep.
1. Be agressively discreet.
2. Get in the habit of keeping good records.
And your mileage record is one of THE simplest records to keep.
10. It is also good to know what information the IRS would ask for in a correspondence audit....which is where they don't make you come in, but they ask you to provide answers to their questions.
So, here you go:
So, here you go:
11.
1.Send copies of repair receipts, inspection slips, and other records showing total mileage for the year.
2.Send copies of logbooks and other records to support the business mileage claimed.
1.Send copies of repair receipts, inspection slips, and other records showing total mileage for the year.
2.Send copies of logbooks and other records to support the business mileage claimed.
12.
3. Provide a copy of your appointment book or calendar of business activities for the year.
4.If you are claiming actual expenses, provide copies of paid bills, invoices, and canceled checks for automobile expenses.
3. Provide a copy of your appointment book or calendar of business activities for the year.
4.If you are claiming actual expenses, provide copies of paid bills, invoices, and canceled checks for automobile expenses.
13.
4 continued: These would include gas, oil, tires, repairs, insurance, interest, tags, taxes, parking fees, and tolls.
5.Send a copy of the bill of sale or other verification to establish your basis in the vehicle, including the trade-in of another vehicle.
4 continued: These would include gas, oil, tires, repairs, insurance, interest, tags, taxes, parking fees, and tolls.
5.Send a copy of the bill of sale or other verification to establish your basis in the vehicle, including the trade-in of another vehicle.
14. Note that the IRS is looking for
•a match of the repair bill odometer reading with the mileage in your logbook;
•a match of the repair bill odometer reading with the mileage in your logbook;
15.
•a match of the inspection slip odometer reading with the mileage in your logbook;
•the mileage between repair stops, to see whether that ties in with your claimed mileage;
and
•a match of the inspection slip odometer reading with the mileage in your logbook;
•the mileage between repair stops, to see whether that ties in with your claimed mileage;
and
16.
•a business purpose that ties in with your appointment book or other calendar of business activities.
Takeaways
If you want to avoid big trouble during an IRS audit, keep a good mileage log.
This takes just MINUTES a day.
If that.
•a business purpose that ties in with your appointment book or other calendar of business activities.
Takeaways
If you want to avoid big trouble during an IRS audit, keep a good mileage log.
This takes just MINUTES a day.
If that.
17.
The mileage log is often one of THE first records that an IRS examiner will look at.
And, a good mileage log shows that you know the rules and you respect them.
I've seen dozens and dozens of IRS audits end favorably and quickly upon presentation of a good mileage log.
The mileage log is often one of THE first records that an IRS examiner will look at.
And, a good mileage log shows that you know the rules and you respect them.
I've seen dozens and dozens of IRS audits end favorably and quickly upon presentation of a good mileage log.
18. On the other hand, a bad mileage log can cause them to want to camp out there and see what ELSE you did a bad job on and what else they can find to make you pay more in taxes.
19. Think of it this way: your mileage log gives you the choice to get in and out of the IRS audit quickly and with your wallet intact,
Or to spend time with them getting a financial colonoscopy....withOUT anethesia.
Or to spend time with them getting a financial colonoscopy....withOUT anethesia.
20.
By the way, you can save THOUSANDS of dollars in taxes a year just by the way you finance your car if you use it for business.
So this is nothing to be scared of....just pay attention to this and it will make the rest of your life easier.
/end
By the way, you can save THOUSANDS of dollars in taxes a year just by the way you finance your car if you use it for business.
So this is nothing to be scared of....just pay attention to this and it will make the rest of your life easier.
/end
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