IRS Audit, IRS Audit Help, Tax Audit, Tax Audit Help

New Year Tax Moves

January 2, 2013 - IRS Audit, IRS Audit Help, Tax Audit, Tax Audit Help

Now that the old year is out and the new year has begun, what do you need to do NOW to help protect yourself and your business from an IRS tax audit?   FIRST: Do you use your car for business? If you have not already done so, go out right now, or as soon as safely and reasonably possible, make a note of your odometer reading. Why? Because if you do this like I do, every New Year’s Day, you will have an accurate reading of your car miles at the very BEGINING of the year. This beginning reading is also the reading for the END of the previous year. This will allow you to prove the TOTAL number of miles driven on your car. And then each trip you drive for business purposes you will enter into your AUTO LOG, the date, where you went and the number of miles driven to get there. Remember, commuting is not deductible.   SECOND: If you do not already have a business bank account, separate from your personal bank account, get a business account ASAP (as soon as possible). Set up your account to generate statements on the last day of each month. Keep your bank statements for EVERY MONTH so you can match your business income with your bank deposits. It will also allow you to see the debits, the checks written. You will have a clear picture of your money in and your money out.   THIRD: Begin assembling your 2012 documents, receipts, paperwork so you really can aim to pay only your lowest legal tax. You already have on hand much of what you are going to use. Is your paperwork in a pile or do you have it sorted into files? Remember, it’s YOUR tax return I am helping you protect.   LASTLY: Watch your mailbox. In the next several weeks you will be getting important papers. And the IRS will get their copy of your W2s and your 1099 forms. If you are a homeowner and pay a mortgage, you should be getting a Form 1098 showing how much interest you paid on your mortgage. Do you have interest and dividend income? If so, you’ll get a 1099INT or 1099DIV. If you bought or sold stocks, you will get a statement from your broker. Depending on the size of your portfolio, this statement can be many, many pages per account.   Your tax adviser is going to want you to bring EVERYTHING in to your appointment. If they are good, they want to save you money just like I do. Always to your lowest legal tax, Nellie T Williams, EA