"The only thing that
hurts more than paying an income tax is not having to pay an income
tax." - Thomas R. Dewar
Avoiding
an Audit
Did you know that more than 100 million tax returns
are submitted to the IRS each year, and less than 2 million are
subject to a closer look? However the more money you make, the
higher the chance your return will be scrutinized. Being a
business owner puts you at an even greater risk of a random audit.
Macey Davis of the National Federation of
Independent Business offers these 5 tips to avoid an audit:
1. Keep original receipts. Keep tax
records and corresponding documents organized and easily accessible for
at least seven years. The IRS has up to three years to audit your
return and six years to come after you if they think you have
underestimated your income by at least 25%. It's a good idea to
attach copies of original receipts, checks, or insurance reports to
your returns. If your tax return is tagged for additional
scrutiny, having the documentation attached could eliminate the need
for a larger audit.
2. File electronically. It is easier for
the IRS to keep track of the return when it is filed
electronically. Filing electronically means your return goes
directly into the system without any eyes looking at it, which means
there's no screening by lower-level clerks.
3. Know when to file. It's a myth that
getting an extension will increase your chances of being audited.
It's more important to take the time to get it right. If you have
a big refund coming to you, file early and get your money back.
If you owe taxes, avoid filing too early. Tax payments made prior
to Apr. 15 for the previous year's tax liability are interest-free
loans to the IRS.
4. Avoid handwriting your return. Math
errors on returns that have been handwritten are common, so the IRS
will look for those- and then they'll look for other errors.
5. Be careful with home-office
deductions. Though the home-office deduction is another red flag
for the IRS, business owners shouldn't shy away from taking it if
they're eligible. But it's best to consult with a tax
professional to help determine if your home office qualifies for the
deduction.
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First Star Capital is a
national leader in all types of equipment financing and leasing.
We operate in all 50 states and are currently offering some of the most
competitive programs in the country. Our transactions are
funded both internally with private label lines of credit as well as
externally with some of the most competitive & flexible funding
partners in the nation. These diverse funding resources allow First
Star the flexibility to undertake a variety of transactions. Nothing is
too big or too complex.
For more
information, contact Brad Harmon at First Star Capital (800-604-4817).
First Star
Capital...Tomorrow's Growth Today
