SPEAKER | TAX ACCOUNTANT | BUSINESS COACH
Tax Season is just around the corner! As we prep for this busy season at Grant’s Financial Services, I’m sharing some insights on how you can make sure you stay in good standing with our buddy Uncle Sam and keep him out of your business.
Who is the IRS and why does it exist?
“The roots of the IRS (Internal Revenue Service) go back to the Civil War when President Lincoln and Congress, in 1862, created the position of commissioner of Internal Revenue and enacted an income tax to pay war expenses. In the United States, the Congress passes tax laws and requires taxpayers to comply. The taxpayer’s role is to understand and meet his or her tax obligations. The IRS role is to help the large majority of compliant taxpayers with the tax law, while ensuring that the minority who are unwilling to comply pay their fair share.”
In short, the I.R.S. helps the country regulate and monitor tax dollars, tax dollars that are ultimately used to maintain government, community programs, schools, city infrastructure, etc.
Common Tax Mistakes
How To Avoid Getting Audited
Consistency is important to the IRS. Any shifts in income are considered red flags, specifically dramatic shifts downwards. For example, if you report $200,000 for the past three years and then only show $100,000 on your next return, you would be targeted for an audit.
On Schedule-C tax returns, any round dollar amounts are also a red flag that can trigger an audit. This is because the assumption is that everything is estimated, so if you have mileage expenses at $5,000, advertising at $10,000 and office equipment at $6,000 it sets off a few alarms. In real life, these amounts usually never equal up to round dollars, so be sure to count every dollar and penny when reporting your expenses.
Being audited by the IRS is the average taxpayers biggest fear. However, if you follow these guidelines and always consult your tax professional, even if Uncle Sam comes knocking on our door, you’ll come out victorious.
Prep for tax season by scheduling your appointment early! Scheduling early will also buy you time if you need to schedule a follow-up meeting. Good news! I'm still taking new clients and would LOVE to work with you.
Call us today to schedule! 312.265.1414 or Book instantly online here.