How the 90-Day Mileage Log Rule Works

Often in an IRS audit, the examiner will ask for your mileage log at the beginning of the audit. If you do not have a mileage log, then you are in danger of losing more than just vehicle deductions. Think about it. If you don’t have a log for mileage, what is the IRS examiner…

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How to Survive an IRS Audit

An IRS audit can be a very frustrating process. With that said, it is important to understand that it is nothing personal. In other words, it is not as if this particular IRS agent singled you out and decided he or she wanted to audit you. Therefore, try to stay calm and keep in mind…

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How to Avoid a Tax Audit

Besides flagrant errors and intentional lies, four innocent mistakes often attract the attention of the IRS or your state. Should you make one of these mistakes, you need an “audit trail” and filing record ready to prevent the initial investigation from becoming a full-blown audit. Let’s cover the red flags first and disaster prevention second….

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IRS Looking For Taxpayers Who Pad Their Tax Deductions

It’s tax time. For those who might think, “I’ll add a little here, maybe add a little more there … nobody will notice, right?” Well, the IRS is looking harder at deductions and is warning taxpayers to avoid the temptation of falsely inflating deductions or expenses on their returns to under pay what they owe…

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7 Steps to Avoid a Tax Audit

One of the most dreaded outcomes of filing your taxes is receiving notification that the Internal Revenue Service would like to administer a tax audit on you. In the simplest terms, a tax audit is an examination of your tax returns to verify that your income and deductions are accurate. The IRS examines your tax…

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Beware – Clergy Audits are on the Rise!

During tax season and throughout the year, IRS agents carefully review every tax return that comes across their desks. However, agents take a second glance if they catch something on a return that seems abnormal. These categories often include charitable contributions, ministry expenses reported on form 2106, SE income, IRC 265 and other business expenses.  This…

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IRS audits of individuals are way down

Thanks to reduced funding to the IRS by Congress, the audit rate for individual tax returns has declined from 291,000 field audits in fiscal year 2014 to 267,000 in fiscal year 2015. The number of correspondence audits increased from 951,000 for fiscal year 2014 to 961,000 for fiscal year 2015. The revenue from examinations fell…

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Will your tax return be audited?

A significant portion of clergy audits include Schedule C and Form 2016. The Schedule C is a one-page tax schedule used by self-employed to report their business income and expenses on their personal federal income tax return. Form 2106 would report ministry related expenses as an employee of the church. The good news is that…

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Increased Payroll Audits for Churches

The frequency of payroll audits has surged over the last five years and churches are facing increased payroll scrutiny. Most payroll audits have traditionally focused on whether or not a church is misclassifying an employee as an independent contractor, thus avoiding Social Security, Medicare and other payroll taxes. Churches misclassify anywhere from 10 percent to…

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IRS Audits on Churches Temporarily Halted

In a previous article “Clarifying the IRS Rules About Endorsing Candidates From The Pulpit,” we wrote about the IRS rules and regulations concerning churches/clergy officially endorsing political candidates. Throughout the election season, the IRS was inundated with complaints regarding the churches officially endorsing candidates. Recently, Bloomberg BNA talked with Russell Renwicks of the IRS Tax-Exempt and…

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