What to Expect During the Tax Preparation Process

Tips to Audit Proof Your Tax Return

When it comes to IRS audits, the burden of proof lies with the taxpayer. As such, if an item is called into question by the IRS, the taxpayer must show proof to support the deductions and tax deductions taken. Protect yourself with our tips to audit proof your tax returns.

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Tax Return Frequently Asked Questions

What type of documents do you need from me to prepare my tax returns? Should I send you my receipts, bank statements, credit card statements?

Please send us copies of your Tax Documents Only (i.e.: Form W-2, Form 1099, Form 1098, etc.) We do not need to see any receipts or bank/credit card statements. You should keep those in a box or file folder for your own records. The receipts and monthly invoices are essentially your "insurance" in case of an audit by the IRS. That will be the only time that you will need to provide them.

If you have a business or own rental real estate, all we need is the summary of your income and expense activities. You can simply send us your QuickBooks or if you do not have QuickBooks to track your income and expenses, you can use one of our Worksheets to summarize your income and expense activities. What you can do is simply go through your credit card/bank statements, receipts, and summarize the expenses into categories as listed on the worksheet. Please do not send your receipts or bank statements.

What is the best way to organize my auto & car expense?

Use the Auto Deductions Worksheet to summarize and track all of your deductible car expenses. Enter the total miles driven during the year as well as the business miles driven. Please note that commuting miles (miles driven from your home to your office/job) are not considered business miles. Please be sure to complete the Auto Deduction Worksheet and include your “Actual Expenses” such as gas, oil changes, lease payments, etc. This way we can calculate and maximize your auto deduction. [Hint: If you did not track your business miles in detail, then you can review 2 months of your driving activities to determine an average business use percentage for your car. For example, if you analyzed your activities for a 2 month period and determined that on average you drive your car 45% of the time for business, then that will be your “business use percentage”.]

What If I drove more than one car for my business during the year?

If you drove more than one car during the year for your business, please separately list the related mileage and expenses for each of the cars that you drove on the Auto Deductions Worksheet.

How do I know what expense I can deduct for my Home Office?

If you have a home office, you can fill out our Home Office Worksheet. Simply go through the worksheet to see the types of expenses that you can write-off. For example, one of the items is mortgage interest. All you need to do is to put in the total amount that you paid for mortgage interest during the year. You can do this for the rest of the expense items on that worksheet and just enter the total amount you paid for each category during the year (i.e.: property taxes, HOA, utilities, etc.)

If I make business calls on my personal cell phone, how much can I deduct as a business expense?

For cell phone use, you can only deduct the business portion as a business expense. What you can do is look at a few months of your cell phone statements to determine what percentage is business related. Then simply multiply the average of those percentages by your total cell phone costs for the year. If you determine that your cell phone is used 45% for business and you paid $1,000 total this year in cell phone bills, then the tax deductible business expense is $450.

When are meals expenses deductible?

_{Business meals are generally 50% deductible. In 2021, business meals purchased from restaurants are 100% tax deductible. Meals are only deductible if business occurs before, during, or after the event. Examples are meals with clients, vendors, investors.}

How can I determine what portion of my travel expenses are deductible?

Travel is 100% deductible if the primary purpose of the trip is business. Travel by airplane, train, bus, or car for business purposes are all deductible expenses. If the primary purpose is not business, then only the expenses specifically for business are deductible. Baggage, shipping, car rental, lodging, laundry, dry cleaning, telephone, fax, internet, and tips paid may all be tax deductions and should all be included as part of “Travel Expenses”.

Who do I need to issue 1099s to?

_{You should issue 1099's to your attorneys, landlords, property managers, independent contractors and service providers whom you paid over $600 total during the year by cash or check. Certain payments made to C Corporations and S Corporations may not require 1099s. To issue the 1099's, you need to have your vendors fill out and return a copy of the W-9 Form to you. For your convenience, click HERE to access the W-9 Form to send to your vendors. Feel free to send us the signed copies and we can help determine which payees need to receive 1099s. Issuance of a 1099 is a requirement by the IRS so we highly recommend you comply with those rules to prevent any penalties.}