We will update you are we have more information.

Bob Rojas

1.  If you write into blogs, don’t use your e-mail address as your user name.  Spammers and Web Crawlers love to copy these off public places and send your lots of span and ads.  Don’t put your email address  in any Facebook comments.  Just because you have good privacy settings does not mean all your friends have good privacy settings.

2.  Do not write back to spammers.  Your angry note asking the to remove you from their list actually verifies your address.  They can now sell your email address as confirmed and charge more money.

3.  I know you are smarter than this, but do not click links from people you do not know. The bigger the prize the bigger the hoax.  You always hope your anti virus software will  protect you, but how lucky do you feel?

4.  Do not give people your password.  They may only want the password for a harmless log in.  The problem is that that password may also give access to your credit card or bank account.

5.  Do not do banking over public WiFi.  You have no idea how secure the network is.  The shop owner may be saving every bit of your info which passes through his server.  The guy next to you could use Firesheep to copy your session.  Only use secure networks for your finances.

These are really basic simple steps, with no guarantees, but they are a good start.

Yi Grizzell

“IRS Tax Tip 2011-71, April 11, 2011

After you file your taxes, you will have many records that may help document items on your tax return. You will need these documents should the IRS select your return for examination. Here are five tips from the IRS about keeping good records.

1. Normally, tax records should be kept for three years.
2. Some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.
3. In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return.
4. Records you should keep include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment, and any other records to support deductions or credits you claim on your return.
5. For more information on what kinds of records to keep, see IRS Publication 552, Recordkeeping for Individuals, which is available on the IRS website at http://www.irs.gov or by calling 800-TAX-FORM (800-829-3676).”

Links:

• Publication 552, Recordkeeping for Individuals ( PDF 61K )

New IRS rule on worker classification  If you had employees classified as contract workers here is an easy way to get them back on your payroll and avoid an audit.  The above link gives you the whole code, but the meat of the article says:

“The new Voluntary Classification Settlement Program (VCSP) is designed to increase tax compliance and lower the  burden for employers by providing greater certainty for employers, workers and the government. Under the program, eligible employers can obtain substantial relief from federal payroll taxes they may have owed for the past, if they prospectively treat workers as employees. The VCSP is available to many businesses, tax-exempt organizations and government entities that currently erroneously treat their workers or a class or group of workers as nonemployees or independent contractors, and now want to correctly treat these workers as employees.

To be eligible, an applicant must:

• Consistently have treated the workers in the past as nonemployees,
• Have filed all required Forms 1099 for the workers for the previous three years
• Not currently be under audit by the IRS
• Not currently be under audit by the Department of Labor or a state agency concerning the classification of these workers

Interested employers can apply for the program by filing Form 8952, Application for Voluntary Classification Settlement Program, at least 60 days before they want to begin treating the workers as employees.”

There are some penalties, but not interest or fines.  Cost is approx 1% of total wages for 1 year.  As always, I recommend consulting your CPA tax professional on this mater before taking any action.

 IRS Audit Tip Offs

Low gross profit margin

High auto expenses

High business use of autos

Number of Autos used in the business

High travel and entertainment

Little or no profit from business operations

High number of deductions

Estate tax return

At home office

Official documents which are incorrect

Large casualty loss deduction

The IRS.gov  website claims audits are triggered by:

• Random selection and computer screening – sometimes returns are selected
  based solely on a statistical formula.
• Document matching – when payor records, such as Forms W-2 or Form 1099,
  don’t match the information reported.
• Related examinations – returns may be selected for audit when they involve
  issues or transactions with other taxpayers, such as business partners or
  investors, whose returns were selected for audit.

]]> http://accountantcalifornia.wordpress.com/2011/10/05/how-to-avoid-an-irs-audit/feed/ 0 accountantcalifornia Our Main Office http://accountantcalifornia.wordpress.com/2011/10/04/6-irs-audit-tips/ http://accountantcalifornia.wordpress.com/2011/10/04/6-irs-audit-tips/#comments Tue, 04 Oct 2011 17:14:32 +0000 accountantcalifornia http://accountantcalifornia.wordpress.com/?p=60 ]]> Help for IRS Audits
We’re seeing an increase in IRS audits in 2011 for 2009 and 2010 returns.  Restaurants are being  audited.  Individuals with schedule Cs are being audited for travel; automobile; and meals and entertainment.
TIP ONE:  If you’re audited,  never represent yourself.   We’ve represented two tax attorneys in the past!  Taxpayers talk too much and give the IRS too much information. We’ve been retained by 3  new clients this week alone.  Each will be represented by one of two MBAs in tax.
TIP TWO: Be respectful.  The IRS  will not go away.  If the notice says reply in 10 days, reply in 10 days.
TIP THREE: Hire a representative that knows the rules but is there to win for you.
TIP FOUR:  NEVER GIVE UP ON THE NEGOTIATION.  If the IRS is correct and there is no documentation for certain deductions or if income is not reported, and  if they find it, remember you can always try to set up a payment plan.
TIP FIVE: If there is an IRS audit adjustment remember to amend the state return immediately.
TIP SIX:  Be optimistic.  Get some sleep.  We can’t guarantee anything but the last two audits we just closed, the taxpayers got refunds.

The tax code gives many tax incentives for parents and students who are saving for, or already paying, higher education costs or are trying to re pay student loans.

There is  a Hope and Lifetime Learning Credit for the qualified tuition and related expenses of the students in your family (i.e., you, your spouse, or an eligible dependent) who are enrolled in eligible educational institutions. Different rules apply to each credit. If you claim a Hope Scholarship Credit for a particular student, none of that student’s expenses for that year may be applied toward the Lifetime Learning Credit.

You may be able to claim a tuition deduction of up to $4,000 of qualified education expenses paid during the year for yourself, your spouse, or your dependent. You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. The qualified expenses must be for higher education.

You may be able to deduct interest you pay on a qualified student loan.   If your student loan is canceled, you may not have to include the amount as income. The deduction is claimed as an adjustment to income so you do not need to itemize your deduction using schedule A form 1040.

The tax code has something for everyone!

My family has been using Netflix for the past four years.   Netflix recently raised their prices.  Now as the marketplace evolves there are now more choices.

Amazon.com now offers movie streaming to Amazon Prime customers for free.  Amazon Prime customers pay $79/ year and get free 3 day shipping for 1 year.  This membership also lets people do free movie streaming from Amazon, however the access is a bit restricted and for more current movies you have to pay .99 to 5.00 for a movie for 40-48 hours.

Blockbusters.com  has been reduced to just $10/month.  Its a great alternative to premium movie channels.  This is a great solution to Dish Network subscribers.  This is not an option if you are not a Dish Network customer.

Personally I find Netflix is still the best deal and when I want something not available to Netflix I just rent a RedBox video for 1.00.

I look forward to future price drops and choices from the free market.

1.  Do they represent their client base well in front of the Internal Revenue Service.  How would you know this?  Ask about him  about his experiences within the last twelve months.  What were the issues and how were they resolved.

2.  Can they tell you exactly how much money they save you every year?  You should be able to ask him this.

3.  Tax laws change every year.  Is he asking you new questions about your return every year.  An example of this is estate tax rules.  Is he letting you know about estate rule changes.

4.  Has his firm completed Peer Review yet?  All firms are now required to submit to this evaluation.  What were the findings?

5.  Is he a one man show?  No one is an expert in everything.  A good firm has several accountants with different talents.  The best tax accountant may not be who you want representing your case with the IRS.  A good researcher may not make you the best deal with an IRS agent.