Posted on 10/12/2011 10:18:17 AM PDT by celticfreedom
The upside is that you can now get money back. You are just entitled to get money back if their is a correction in your favor.
I just put in my 2010 taxes. Thank goodness I didn’t round the numbers!
And I think I better start keeping a log again (independent contractor). I used to keep a log. Use my truck almost exclusivly for work. For three years in a row I was within 1000 miles a year for total driven, and was 86% to 89% work related based on my logs. I’m still within that 1000 mile a year mark, and the past two years just use a factor of 87% because I was lazy.
Lazy probably doesn’t cut it on an IRS audit though.
Everything else has receipts though.
I mentioned something about the new forms (1099) us independents need to fill out for folks that get more than $600 a year from us. Something like “like the IRS is going to have time for checking into all of that”. My CPA looked at me seriously and said “No - they are getting VERY serious about taxes. Things have changed. They’ll be looking.”
Forgot something in my previous post.
If you need help with the IRS, an Enrolled Agent would be better and cheaper than a lawyer. An Enrolled Agent (or EA) is a tax professional recognized by the federal government to represent taxpayers in dealings with the IRS.
Have a tax attorney specializing in IRS cases with you. Record all proceedings, threats and demands.
Use a pencil.
This could be to your advantage if it is properly documented.
Respond with actual factual information with a notation of difference from the tax return.
Are they asking for information or have they proposed an adjustment?
If you document actual business miles with a log or other written documentation of actual mileage, then you should be able to resolve it to a no change audit or get a small refund.
If the IRS does not allow your additional miles, you can later file a 1040x amended return to claim your additional deduction and refund.
Do you have more than 1 client that is paying you a fee? Otherwise they may be looking to change your status to employee. It may be worthwhile to have a CPA review it before replying to IRS.
In my audit experience, that is what they are counting on. They will try to wear you down to pay them to leave you alone.
When I was audited they would give me two weeks to reply to their letter and the time started when they mailed the letter, so I would have insufficient time to make a good reply.
I learned to just send them more documentation with each request, even if I did not have everything I wanted to send. They would follow up with another challenge. I would send more documentation. After four or five challenges and document dumps, they gave up and said I didn't owe them anything.
Good luck and stay tough.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.