VIEWpoint Issue 1 | 2022
Brief Insights | Meeting Provider Relief Fund Reporting Requireme...
VIEWpoint Issue 2 | 2021
While there is no guarantee for avoiding an Internal Revenue Service (IRS) audit, there are some steps you can take to reduce your risk of being examined. Unreported income is often the number one red flag that triggers an audit, but excessive business deductions are a close second. If you claim large deductions on your return, the chances of being audited increases significantly. Deductions likely to increase IRS scrutiny include home office deductions, non-cash charitable contributions, unreimbursed business expenses and claiming the business use of a vehicle at 100 percent. To ensure your business is meeting documentation and substantiation requirements established by the IRS, you should always maintain adequate records of business expenses. If you have expenses for travel, entertainment, gifts or transportation, then you MUST maintain documentary evidence showing the details of the amount, date, place and essential character of the expense. Documentary evidence can be in the form of receipts, canceled checks or bills supporting your expenses. A timely-kept record has more value than a statement prepared later when generally there is a lack of accurate recall. For example, if you are paying business expenses with a credit card, the credit card statement itself is not sufficient. You should still retain copies of physical receipts. Otherwise the IRS could disallow the expense entirely. Business owners should generally keep records supporting business deductions for at least three years from the date you file the tax return on which the deduction is claimed.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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