Tax Tip: Are You A Household Employer?

Between full time jobs, children, and pets many people pay others to help them with household chores and related tasks. If you pay an individual to run errands for you, babysit your children, walk your dog, or do other types of work for your home, you may have additional tax obligations as a “household employer.” […]

IRS Resurrects Offshore Voluntary Disclosure Program (OVDP)

The IRS recently announced the resurrecting of the Offshore Voluntary Disclosure Program (OVDP) after its collection of more than $4.4 billion in back taxes from those programs in 2009 and 2011. The third offshore program is similar to its 2009 and 2011 predecessors with a few key differences: The new program does not have an […]

Operating Losses: Prove Your Hobby Is a Business

Be ready to prove that your hobby is a business if you want to write off your losses. If you intend to earn a profit from engaging in your favorite hobby — a hobby business — you may be able to deduct your hobby-related expenses or losses from your income and lower your tax bill. […]

IRS Will Not Pursue Gift Tax Audits for Donors to Section 501(c)(4) Organizations

The IRS just announced that it will not pursue gift tax audits of donors to Section 501(c)(4) organizations, and closed the outstanding examinations.  Further, it is coordinating with its Office of Chief Counsel on the need for further guidance, but any enforcement action would be prospective only and after notice to the public. See below for a […]

What Auditors Look for When Examining a Business

Know what an IRS auditor looks for when examining your business and its records. If the IRS is auditing your small business, you should do two things: First, prepare for the audit. (For information on this, see Preparing for a Business Audit.) Second, learn what the IRS auditors are looking for when they examine your […]

Preparing for a Business Audit

Be prepared for an audit of your business. Who’s afraid of the IRS? Almost everyone. The key to surviving a tax audit — and even coming out on top — is not to panic, but prepare. What to Do Before Your Audit If you go it alone, before meeting the auditor, you should thoroughly review […]

IRS Audits and the Self-Employed

According to the IRS, self-employed taxpayers are among the worst tax cheats.  Unfortunately for the vast majority law-abiding self-employed taxpayers, this means that they, as a group, are more likely to be targeted for an IRS audit.  Thankfully, there are steps that the self-employed can take to reduce their chances of being audited. The two […]

Appealing an IRS Audit

In order to appeal an IRS audit, a taxpayer must take a few simple steps.  First, you must write a letter of protest and send it to the local IRS district director.  At the same time, you should organize all of your financial records and file a Freedom of Information Act request for the auditor’s […]

8 Ways to Attract an IRS Audit

Math Errors: Take the time to make sure your calculations are correct all the way throughout your return. One thing IRS computers can do is add and subtract and too many math errors can indicate a sloppy return. Unreported Income: IRS computers match the various varieties of report income such as Form 1099s issued for […]