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Recent IRS Audit questions

My girlfriend and I just had a daughter this last June.

My girlfriend and I just had a daughter this last June. Before that, we were split up. When our daughter was born, both of them moved in with me. My girlfriend and daughter were both on Medicaid due to her pregnancy and complications. My girlfriend did not have an income the whole year. Would I be able to claim both or one of them? Will it affect me somehow because they were on medicaid? I did make over 70K for the year.

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Mark Taylor

Certified Public Accountant

Masters

2,688 satisfied customers
Can you give me info. on an investment I made in Mexico and

Can you give me info. on an investment I made in Mexico and loss Is it deductable on Income tax ?JA: The Accountant will know how to help. Please tell me more, so we can help you best.Customer: I invested $250,000 with Capital Bank Mexico in 2009 in CD's I was notified that the man who owned the Bank was arrested and there was no Capital Bank Mexico. Can I claim this loss on My income taxJA: Is there anything else the Accountant should be aware of?Customer: If it can be claimed , would it be an investment loss or a theft loss?

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Mark D

Master's Degree

994 satisfied customers
I have been selected for an IRS audit. I have been asked to

I have been selected for an IRS audit. I have been asked to provide (mail in) documentation for my Employee Expenses Deductions and my Miscellaneous Deductions. I have been audited for the 2014 tax year. I have some of the documents, but not all. What should I do?

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emc011075

Tax advisor and Enrolled Agent

Bachelor's Degree

4,962 satisfied customers
I have a tax question and would like to tax to a tax lawyer

I have a tax question and would like to tax to a tax lawyer or a lawyer familiar with tax issues?JA: What state are you in? It matters because laws vary by location.Customer: I'm in Utah, but this is an IRS issue on the federal level.JA: Has anything been filed or reported?Customer: Yes, I'm going through an IRS audit and I just have a question I need guidance on.JA: Anything else you want the lawyer to know before I connect you?Customer: It has to do with start up costs being capitalized over 5 years and what would constitute start up costs vs. losses for the year...JA: I'm not sure of the exact price, but there's only a $5 deposit. The rest of the price information will be on the page I send you to.Customer: Ok Is there a lawyer online available now?

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Lane

JD, MBA, CFP, CRPS

Doctoral Degree

19,804 satisfied customers
I'm considering driving for Uber around 12/26/16. My first

I'm considering driving for Uber around 12/26/16. My first pay check will be around 1/3/17. I'm going to pay / buy the following BEFORE I start driving so I can claim these expenses on my 2016 tax return. I'll claim the STANDARD mileage for miles driven. Here's what I'll be buying BEFORE I start driving (buying in 2016)Rideshare auto insurance (around $1,000)Bulk water's and gums for clients (around $200)Reverse light camera for my car (around $100)Car seat covers (around $200)..this adds up to around $1,500 in total and because I won't start driving until the last week in December,2016 and get paid for that week in January, 2017 I'll be showing Schedule C expenses of $1,500 and income of $0. My question is: will it look weird that I started a rideshare business, accumulated $1,500 in expenses but $0 in income? I only ask because no-one, including me like the hassle of IRS audits!

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ABC Accounting Group

Bachelor's Degree

536 satisfied customers
I am going through an IRS audit dealing with employee

I am going through an IRS audit dealing with employee mileage on form 2106. I showed proof that my employer requires me to travel to different work sites. The auditor accepted the proof but insists that I show mileage proof from my odometer. I have not repaired my auto, I do my own oil changes, etc. I have no odometer readings that year. Any thing I can do now?

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Mark Taylor

Certified Public Accountant

Masters

2,688 satisfied customers
I am self employed and travel for business. I recently

I am self employed and travel for business. I recently caught an error in my 2014 tax return. I accidentally deducted the same flight twice (once when I paid for it and later when I took the trip. I keep very accurate records and make it a habit to expense the flight the same week I take the trip unless ithe trip occurs in the following year. I also like to hold back on some legitimate business expenses in case I catch an error. Thus, I have a previously non-expensed item (for a small tablet computer) that is very close in value to the flight. It would be appropriately expensed and not depreciated so my tax liability would not change. Question. I know these are in different categories, but am I okay not amending? The tax impact of the missed flight is negated by adding the additional expense. Also, I only report a portion of my charitable donations. I give quite a lot and simply don't want to send out a red flag. So, I have plenty more that I could have deducted and it also is a buffer in the event an audit found any mistakes.

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Robin D.

Vocational, Technical or Trade School

22,442 satisfied customers
I am a tax professional (EA) and one of my clients sent me

I am a tax professional (EA) and one of my clients sent me the following article. He has an S Corp. Please review it and let me know your view on it. As far as I know, what he is proposing requires the client to pay 15.3 % of all ;profit to Social Security and Medicare. And for a one man S corp I see little advantage in what he is proposing. Am I missing something here? Also, last I knew S corps were way less audited than Sole Props. Not sure about partnerships. And I do not see why he would put things in a format that appears to give no SE tax shielding. Let me know your view. I am dealing with many one and two man S Corps and LLCs filing as S-Corps. Usually it is a step up from Sole Prop to shield profit from SE tax. Is there some advantage to what this guy says, or is he just ranting.LET'S PLEASE PUTS-CORPS COMPLETELY TO REST – DEAD & BURIED!We are in the 21st century, not the 1st century!Despite telling real estate investors and business owners to avoid S-corps in my courses, newsletters and other correspondence, I continue to get questions on using an S-corporation. The “S” in S-corp stands for SUCK! Here is why, which is not based on my opinion, but based on factual data…Major Tax Pitfall Of S-Corporations_More IRS audit profile and audited much more than partnerships. Very high IRS exposure (the most IRS litigated entity where the taxpayer almost always losses)._Highly Taxed W-2 Salaries With Substantial Employment Taxes – The net income of an S-corp is presently exempt from employment taxes*. But, based on numerous and continuing Tax Court cases, IRS requires the S-corp to pay you a significant amount (even 100%) of highly taxed W-2 salaries along with payroll taxes and filings. This amounts to thousands of dollars of “garbage” employment taxes out the window, reducing your business cash flow. (*Pending legislation would make S-corp net income totally subject to employment taxes)._Limits on fully deducting business tax losses because such losses are limited to the shareholder's basis in the S-corp's stock, which does not include third party debt. Termination of an S-corp status freezes the deductibility of unused carryover losses._S-corp distributions of tax-free borrowed money to shareholders could be taxable because of the above basis limitations. What a tax disaster!_Income and losses must be apportioned strictly in accordance with the exact number of shares owned, with no variations of special allocations to different shareholders._Limits on who can be a shareholder. S-corporations cannot have as shareholders – IRA's, corporations, partnerships and non-resident aliens._An S-corp can have only one class of stock ownership. Not being able to treat entity owners differently puts a limit on tax-reduction planning, such as with a special two-tier LLC structure (see below).What To Do > LLC-partnerships do not have the following disadvantages. Therefore if you have an S-corp, for your real estate investments or your small business other than real estate, get RID it.For real estate investments use a properly structured real estate LLC-Partnership per The LLC Master Machine Asset Protection System www.LLCProtectYou.comFor a small business other than real estate, use a properly structured two-tier business LLC-Partnership per The Business Owner's LLC- Protection System www.LLCBIZShield.comKnow Thy Money!SOME HARDCORE FACTS ABOUT MONEYFACT 1: NO body, but NO body. cares more about your money than YOU! And that is the way it should be as you are the owner. When I say “money” I do not just mean cash or bank accounts; there is also the equity in your home, real estate investments and other assets – IRA, 401(k), other retirement plans, stocks, bonds, mutual funds, insurance, annuities, etc. And your taxes (see below).FACT 2: Taxes = Money! Saving taxes is like making money. The wealthy know that taxes are a primary factor in determining whether you get rich or stay poor. Let's say, for example, you're able to save just $2,000 annually on your tax bill. (With a good tax plan it will be much higher). You invest the $2,000 annually in an IRA which earns a tax-free annual return of 10%. After 20 years, you'll have over $114,000! If you can save $10,000 annually on your tax bill and invest it in a Simple IRA for 20 years, you'll end up with almost $573,000! Over a half of million dollars!! (Imagine how much with Mike Warren note buying!) $5,000 in tax savings (which is found money) as a 10% down payment can allow you to buy an additional $50,000 in real estate! Assuming a 20% yearly return you would earn $10,000 which in 5 years would accumulate to $50,000! Get the point? Money makes money, but tax-free money makes a lot more!!

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Lane

JD, MBA, CFP, CRPS

Doctoral Degree

19,804 satisfied customers
2014 Tax question. I am a US citizen working as an

2014 Tax question. I am a US citizen working as an expatriate. I also had a LLC I was running and had a great deal of business expenses.My Question is, how can I avoid overpaying taxes?What can I write off, how can I recoup some of the taxes I have paid?

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Mark Taylor

Certified Public Accountant

Masters

2,688 satisfied customers
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