IRS Targets Self-Employed

[BFT3K]

It is widely held misconception that the IRS tends to predominatly go after big corporations or high net worth individuals, accountants and tax attorneys said.

Full story here...

http://abcnews.go.com/Business/Tax/i...0313334&page=1

[IllTestYourGirls]

I thought that was common knowledge?

[JFK]

short , but interesting read

[bronco67]

I was surprised to read that I'm in the number one target group -- self-employed artist.

But even though I'm one of the most disorganized individuals, my papers are in order when it comes to my taxes. I pay my quarterlies and don't try to make BS business deductions.

[PornMD]

That's why this country is in debt. Not that they should completely avoid auditing the little guy, but it makes more financial sense for them to make sure the big fish are paying their dues. But with the government in the pockets of the wealthy few and large corps, that will never happen.

[V_RocKs]

Don't show a loss over and over...

[96ukssob]

In 2006, the IRS conducted around 1.2 million examinations of individuals who earned less than $200,000; last year, there were around 1.3 million of those types of examinations. Still, roughly 90 percent of the 1.4 million IRS audits conducted in 2009 involved persons earning under $200,000. By comparison, the IRS conducted just 28,349 examinations of individuals who earned more than $1 million.

So as long as you are self employed and earned more than $200k/year you are in the clear

Think about it tho, big businesses and the wealthy have the money to hire tax attorneys and accountants to do their taxes, so although they're are probably cheats out there, its a tougher barrier than Joe Blow the home business guy who writes off everything under the sun

[bronco67]

Can anyone answer this?

Under the advice of someone, I basically come out with zero profit, and only file personal income tax. So I buy the right amount of business expenses(which I need) and pay myself salary so that on dec 31, my business shows no profit.

Is it bad to go this way, while we're talking about things that could get you audited?

[leg4]

Big companies have too much money and lawyers to fight things, of course they will go after self employed.

[LoveSandra]

interesting

[xxweekxx]

Originally Posted by bronco67

Can anyone answer this?

Under the advice of someone, I basically come out with zero profit, and only file personal income tax. So I buy the right amount of business expenses(which I need) and pay myself salary so that on dec 31, my business shows no profit.

Is it bad to go this way, while we're talking about things that could get you audited?

whats the point? how can you show no business profit but still file personal income tax.. either way you are paying tax on your income... how are you avoiding this?

[Wilbo]

I heard from a guy who got audited that a home office deduction is a BIG red flag.

[Barefootsies]

Originally Posted by PornMD

That's why this country is in debt. Not that they should completely avoid auditing the little guy, but it makes more financial sense for them to make sure the big fish are paying their dues. But with the government in the pockets of the wealthy few and large corps, that will never happen.

It's about picking a fight they can win.

Corporations have the deep pockets to fight them for years.

[pornguy]

In all deductions you take you have to be reasonable.

[Sly]

Originally Posted by bronco67

Can anyone answer this?

Under the advice of someone, I basically come out with zero profit, and only file personal income tax. So I buy the right amount of business expenses(which I need) and pay myself salary so that on dec 31, my business shows no profit.

Is it bad to go this way, while we're talking about things that could get you audited?

Who is "someone"? Don't listen to "someone" or people from GFY. Listen to a lawyer or accountant. They really aren't that expensive in exchange for the knowledge and experience they can share with you.

[pimpware]

Originally Posted by PornMD

That's why this country is in debt. Not that they should completely avoid auditing the little guy, but it makes more financial sense for them to make sure the big fish are paying their dues. But with the government in the pockets of the wealthy few and large corps, that will never happen.

Your country is not alone, it's always easy to fuck with the little guy. Big guys have BIG lawyers and "friends"

[Barefootsies]

Originally Posted by Sly

Who is "someone"? Don't listen to "someone" or people from GFY. Listen to a lawyer or accountant. They really aren't that expensive in exchange for the knowledge and experience they can share with you.

True dat.

[woj]

Originally Posted by bronco67

Can anyone answer this?

Under the advice of someone, I basically come out with zero profit, and only file personal income tax. So I buy the right amount of business expenses(which I need) and pay myself salary so that on dec 31, my business shows no profit.

Is it bad to go this way, while we're talking about things that could get you audited?

it depends on many factors... how much you made? if you are incorporated, what type? etc one strategy isn't right for everyone, so talk to your accountant to work out the best strategy for yourself

[bronco67]

Originally Posted by Sly

Who is "someone"? Don't listen to "someone" or people from GFY. Listen to a lawyer or accountant. They really aren't that expensive in exchange for the knowledge and experience they can share with you.

Actually, it's my accountant, but different people I know who are incorporated go different routes. I pay my quarterlies, it's just for personal income on the the salary I give myself.

I'm just wondering if showing zero profit year after year is red flag material.

[xxweekxx]

of course its red flag material.lol my new accountant says things like:

showing big losses or no income
deducting part of your rent

those are 2 big red flags..

[DateDoc]

Originally Posted by bronco67

Actually, it's my accountant, but different people I know who are incorporated go different routes. I pay my quarterlies, it's just for personal income on the the salary I give myself.

I'm just wondering if showing zero profit year after year is red flag material.

If it is a chapter S corp it is supposed to show zero income.

[seeandsee]

Originally Posted by BFT3K

It is widely held misconception that the IRS tends to predominatly go after big corporations or high net worth individuals, accountants and tax attorneys said.

Full story here...

http://abcnews.go.com/Business/Tax/i...0313334&page=1

IRS payday

[JP-pornshooter]

Originally Posted by DateDoc

If it is a chapter S corp it is supposed to show zero income.

correct an S corp profit carries over to personal income and is taxed on the personal level.
HOWEVER A BIG RED FLAG HERE FOR THOSE WHO DONT PAY THEMSELVES SALARY (MEANING YOU ALSO PAY PAYROLL TAXES SUCH AS UN-EMPLOYMENT AND SS TAXES ETC).

[bronco67]

Originally Posted by DateDoc

If it is a chapter S corp it is supposed to show zero income.

Its an LLC.

I don't have a whole lot of contact with my accountant. My father-in-law's business lets me use him each year, but I rarely meet with the guy. I need to see what he thinks -- but he obviously has no problem with me balancing my books to get zero business income.

[baddog]

Never mind

[BAKO]

I got Audited once for 2007 and i tell you it was no fun at all

[D Ghost]

How about the Federal government doesn't continue on as the highest spender on military in the world. That is the biggest waste of money... and lining the pockets of useless private firms.

Also, regarding the Fed Tax in general - it is outrageous.

"Long ago, the Swiss understood that most things government needs to do and constructively does are at the local level. So, unlike in most modern nation-states, local government has the bulk of the resources and activities, while the central government remains relatively small and less important in the daily lives of the people. In the U.S., roughly two-thirds of government is at the federal level, and one third is at the state and local level. Switzerland is just the opposite, with roughly two-thirds of government being at the state (canton) and local level. Both the United States and Switzerland are federal republics. If one reads the Federalist Papers and the other works of the American Founding Fathers, it is clear they envisioned a nation that operates much more like Switzerland than one with the large central government the U.S. now has.

The maximum marginal tax rate at the federal level in Switzerland is about 11.5 percent, while in the U.S., it will be more than 40 percent as a result of Obamacare and the planned expiration of the George W. Bush tax-rate cuts at the end of this year. In Switzerland, maximum income tax rates in the cantons range from 10.9 percent in Zug to about 30 percent in places like Geneva. In the U.S., state and local income tax rates range from zero in places like Texas and Florida to roughly 12 percent in New York City and California. Thus, the overall maximum income tax rate in Switzerland ranges from roughly 20 percent to 40 percent, depending on location, while in the U.S., the maximum rate ranges from 40 percent to 51 percent.

Switzerland also does not impose a capital gains tax, and most cantons allow large deductions for interest and dividends. On the negative side, Switzerland imposes a value-added tax (VAT) and a very small wealth tax. On the positive side, the average combined federal-canton corporate tax rate is 21.3 percent (and may be as low as 11.8 percent in some places) while in the U.S., the average combined federal-state rate is more than 40 percent."

http://www.brusselsjournal.com/node/4377