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Avoiding IRS Red Flags

12:40
20:42
14.9K views

At 12:40 in

Small business taxes, IRS problems, tax season planning 1/2 4 k video

What happens here

The accountant explains that tax planning (legal ways to lower tax liability) is distinct from tax evasion (illegally not reporting income or fraudulently deducting expenses). He gives examples of personal vs. business travel, stressing the need for "ordinary and necessary" expenses. He also highlights a key IRS red flag: an accountant who doesn't ask questions about your business transactions, as a good accountant should thoroughly understand your business.

Goal: Understand the difference between tax planning and evasion, and identify IRS red flags.

What they say

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ago hey this isn't right and you owe us this money but you can see where two accountants can give you two completely different results using the same numbers and is how they understand your business which is the most important thing yeah and that's that's asking questions and I don't want to say that somebody can't do your return right if they never ask you questions but I it doesn't work for me people that if you come in and meet with me face-to-face or if you send me your information we're gonna have to have email exchanges and/or phone call because I'll have questions there's we always find things that they just haven't sent then so your comb should understand your business but there's gonna be transactions in your Bamm enough to say hey Stan what was this one for you know and that's just so if they're not asking you questions to me that would be the biggest red flag because you're not gonna send a hundred percent perfect information to me I'm gonna I'm gonna have to ask questions and so if they don't I'd be worried that stuff was being missed let's talk about deductions the sample what an actual deduction is first and foremost so a person so these guys know what an actual deduction is can you tell me what that is sure I mean the definition for business expenses it has to be ordinary and necessary so you know necessary if you need it for your business and again you mentioned kind of interpretation that's there is a little bit of interpretation but you know in common sense really if you're traveling to a out-of-state convention for country you know landscaping contracting whatever you go for three days that's what you did that's all deductible you know if you go to same location for a week in your timeshare and you duck out for a three-hour contractor meeting you know that trips not deductible that was a personal trip that you just went to a seminar on and you can deduct if you paid anything for that seminar but you know there's just a lot of different scope of things and then looking at your office you know using your home office mileage different deductions for vehicles but I'm going beyond the scope of your question so that's to be it has to be is next very much it has to be necessary for business which is why I use the travel example I mean is a convention necessary for business or ordinary I would say yes and yes that's reasonable right right but is it necessary for you to spend a week out there and go skiing and go no condemning so yeah I mean you…

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