The IRS is not the enemy. In reality, the process hundreds of millions of tax profiles a year from people with a wide range of incomes. Some will try to bend the system, and some will outright try to cheat it. It is many people in the middle who are pushing the envelope a bit with what they can get away with while not necessarily being downright nefarious. Deductions are a big place for an IRS in Galt CA agent to find what is fair- and what is going over the line.
How should deductions be maintained moving into 2016? A Galt CPA has a few strategies for using deductions properly. Visitors can browse a website to learn more about deduction management.
Entertainment expenses leave a lot of room for deception. Entertainment is not always clearly defined with a tax return. It usually includes meals, event tickets, and many other entertaining nights out. Almost any type of entertainment can somehow be connected as a viable business expense. Filers can simply say that it was meant to indulge a client. All of this may be fair, but it certainly sets off red flags for an IRS agent. There are some tips to filing entertainment deductions:
1. All expenses should be logically connected to the business. There should be a legitimate reason for “why” something is listed.
2. Expenses over $75 should be validated with documentation. Ideally, anything over $20 should have a receipt, but the expensive items will sway the agent’s satisfaction in an audit.
3. Hotel night stays are usually the most practical write-off in the entertainment category. It also helps if the individual has done business in the area. For example, they had an income report from a client based in Tampa, Florida, and the hotel stay was for the same time. This creates a clear line from one part of the return to the other.
Tax season is here again, and the above tips and filing strategies will help keep off any potential heat from an audit. A fair and logical tax return is the best strategy for limiting the chances of a long and exhausting audit process. For more information contact Galt CPA
