Posted by John Tennant on 5/16/13 2:20pm
Msg #470249

Latest Red Flags for tax returns.

For the experienced Notary as well as the Newbie.

Want to make yourself an audit target? File a Schedule C listing no income.

Tax Court decision listed in Op. 2013-35 gives the details. (on the IRS website).

Can the IRS have an unlimited time to go after you if the transaction was over three years ago? YES, if the return had never been filed they can go back to day one. This is another recent Tax Court case.

The updated list of common audit triggers, taken from Kiplinger Tax Letter dated May 10, 2013.

Link: www.kiplinger.com/letterlinks/audittriggers. (you may need to copy and paste)

1. Making too much money.
2. Failing to report all taxable income.
3. Taking large charitable deductions.
4. Claiming the home office deduction.
5. Claiming Rental losses.
6. Deducting business meals, travel, and entertainment.
7. Claiming 100% business use of a vehicle.
8. Writing off a loss for a hobby activity.
9. Running a cash business.
10. Failing to report a foreign bank account.
11. Engaging in currency transactions.
12. Taking higher than average deductions.

I took the liberty of posting this due to the many questions asked on our forum the last three years. Many of these things relate directly to our business. Plan ahead for your next tax season.

Good Luck

Reply by sueharke on 5/16/13 5:12pm
Msg #470266

Good list. If I may add one more to this subject:

Have one expense on the Sch C expenses be very large in relation to all the other expenses/total expenses. When a number sticks out like a sore thumb, then the IRS might want to see the reason and receipts for that particular deduction.

Reply by Les_CO on 5/16/13 5:14pm
Msg #470267

Or making a contribution to a conservative organization? (this could be unpublished)

Reply by JanetK_CA on 5/17/13 12:47am
Msg #470302

John, related to the home office deduction, have you ever seen anything that addresses those who have no other business address apart from the home office? I can see them going after people whose primary place of business is somewhere else and they claim a home office because they take work home, but if our ONLY office is in the home, it doesn't make sense to me that that would be a red flag, barring any other issues that stand out.

Reply by John Tennant on 5/17/13 10:26am
Msg #470331

Janet, that is a whole other an of worms. n/m

Reply by John Tennant on 5/17/13 10:28am
Msg #470332

Re: Janet, that is a whole other an of worms.

Op's too fast with the fingers.

Later today I will start a new thread with what the IRS uses to determine a "home office", and also how that works with mileage deductions. I will quote the info from the specific IRS publications.

Have a good day.