IRS Taxes

Phoenix Accountant | Record keeping

With the IRS and states struggling to stay afloat, many tax payers worry about the chances of an audit. While your chances may be slim of ever being audited, there is nothing worse than getting the letter in the mail that your return has been selected for examination. This will be an especially stressful situation if you failed to keep sufficient records to substantiate the deductions you claimed on your tax return. Here a few helpful tips on what the taxing authority will want if you get audited.

Meals and Entertainment – Although you are not required to keep receipts for meals and entertainment purchases under $75, it never hurts to have them. On each receipt it should have the purpose of the meeting, who you were with, and the relationship you have with the person.

Automobile Expenses –  Regardless of if you’re using the mileage method or the actual expenses method to calculate your automobile expenses, you should be keeping a mileage log of all of your miles. The actual expenses method takes into account the business portion of miles driven and multiplies that percentage by the total expenses incurred during the year. IF you are using the actual method, you should keep copies of all receipts related to the vehicles. The mileage method multiplies the total business miles driven by the government set standard mileage rate to calculate the deduction. The mileage log should show beginning and ending mileage, purpose of the trip, and the date of the trip.

Gifts – Don’t go overboard on gifts to clients and business associates. The IRS only allows a deduction in the amount of $25 per year per client. You should keep a copy of the receipts and write on it the reason for the gift, who you gave it to, and their relationship to you.

If you have any questions, please don’t hesitate to contact us at Dusseau & Makris, PC, your Phoenix CPA firm.