Even if you’re sure your records are in
order, tax audits can be stressful and overwhelming. Therefore, many
companies in Rancho Cucamonga, CA, reach out to Whyte & Associates
for a business account review. Whyte & Associates professionals know
that the IRS uses a computer program to analyze returns, those returns
with statistical outliers are often flagged.
There are some common areas that are most likely to cause a flag by the computer program, including:
- A higher than average income. Less than 1 percent of
individuals making less than $200,000 a year are audited. Individuals
who make more than $1 million are audited nearly 11 percent of the time.
While you don’t want to make less money, it’s important to keep
meticulous records, just in case you’re audited.
- Out of proportion deductions. You should always take
all the appropriate deductions. However, the IRS uses a table to
determine how large your deduction amount should be. Don’t falsely claim
deductions, as this can cause your deduction to be out of proportion
with your income, which will cause a flag.
- Rounded or averaged numbers. You may think that one or
two dollars won’t make a difference, but using rounded number can make
the IRS systems think that you’re making up numbers.
- Home office deduction. This home office deduction only
applies if that portion of your home is only used for business
purposes. If you’re working from the dining room table or a corner of
your bedroom, you won’t be able to claim this deduction.
- Continued loses. If you’re losing money year after
year, the IRS may assume that you’re claiming losses to avoid paying
taxes. Be sure that you have accurate records to clear up any
allegations.
To schedule a business account review, contact Whyte & Associates today at (909) 575-0080.
