Part One
THE AUDIT NIGHTMARE
According to a recent article in Forbes magazine, the IRS has
increased both the frequency and intensity of their most demanding
line by line audits. As a self-employed taxpayer, you stand a greater
chance (1 in 112) of being audited than taxpayers who simply file a
Form 1040 (1 in 6616). Taxpayers with very high and very low incomes
also have a greater than average risk of being audited. Smart Money
magazines reports that the income level that triggers the most audits
is $100,000.00 and over. The next likely group to be targeted are
taxpayers who report under $25000.00 of income.
Did you know that the city you live in can also influence your
chance of being audited? According to Martin Kaplan, CPA who wrote
the book "What the IRS Doesn't Want You to Know", 1.57% of all
returns from Los Angeles get audited: however, if you live in Albany,
NY the audit rate falls to .25%.
Amazing! So what can you do?
Accurate and complete records are essential for reconstructive
purposes if you are audited. Written records to account for how much
money you earn, the total paid out for direct and indirect business
expenses, payments for utilities, and total miles traveled
exclusively for your daycare business must be maintained.
As an accountant and income tax preparer who is often called upon
to audit clients' records, I would like to share some tax tips with
all of you. Since I have operated my own home daycare for 6 years, I
have been able to see both sides of this issue and have lots to
share!
Just what to keep track of and how to record it will be the focus
of this feature. I also plan to cover a multitude of wonderful income
tax deductions which are applicable to home daycare businesses as
well as creative tips which will help to reduce your taxes.
part two
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About the Author:
All articles ©Copyright 1999 Brigitte A. Thompson
Brigitte is the President of DATAMASTER, LLC and has been providing
accounting, bookkeeping, income tax and payroll services since 1992.
She has also operated a home daycare for years and has written a
book
for providers :
The Home Daycare Complete Record-keeping System
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