28 The QUEE NS Courier • FEBRUARY 7, 2013 for breaking news visit www.queenscourier.com tax tips Ways to Avoid Being Audited by the IRS BY BARY LISAK Barry Lisak, EA, is an IRS Enrolled Agent who has operated a tax preparation office for over 30 years. Any questions or comments, please contact mrbarrytax@aol.com or 516-829-7283. Many taxpayers fear an IRS audit. Although the IRS audit targets change with the times, below you’ll find some of the high-risk tax audit areas that the IRS has examined in recent years: 1. Higher wages. For those making more than $100,000, the odds greatly increase over lower income earners. The chance of audit doubles. 2. Large amounts of tax deductions. If your itemized tax deductions on your tax return exceed a target range as set by the IRS, the chances of being audited by the IRS increases. 3. High DIF. When your tax return is filed, IRS computers compare it against the national Discriminate Information Function (DIF) average. Tax returns with the highest DIF scores are scrutinized Photo courtesy THEWHO.com s to determine the best chance for collecting additional taxes upon audit. 4. Self-employment. Self-employed Schedule C filers who report a business loss are likely to face more questions from the IRS. 5. Running a cash business. Small business owners, especially those in cash-intensive businesses, are tempting targets for IRS auditors. Experience shows that those who receive primarily cash are less likely to accurately report all of their taxable income. 6. Unreported alimony. The IRS has found that not all taxpayers report alimony receipts as taxable income. As a result, the IRS now matches tax deductions for alimony payments by one former spouse with the taxable alimony income reported by the other. 7. Automobile logs. One of the biggest and most audited items by the IRS for individuals in their own businesses, and employees of companies who use their car for business, is the tax deduction for business transportation. It is important that you keep good records of all tax-deductible automobile expenses and a mileage log showing business miles driven. 8. Failing to report a foreign bank account. The IRS is interested in people with offshore accounts, especially those in tax havens. Failure to report a foreign bank account can lead to severe tax penalties. You should take every deduction you’re entitled to on your tax return, and you should not be frightened by the potential of an IRS audit. Substantiation and proof of deductions is the key. Free Booklet: I have written a booklet, “IRS Secrets Revealed: 21 Audit Red Flags”, contact me for a complimentary copy. “Two Decades Of Personalized Service” LJC@loucarino.com The IRS will NOT be processing Form 8863 beginning on January 30th. Instead, it becomes one of the forms that is being delayed until late February or early March. This is a fairly common form that will impact many taxpayers. The American Opportunity Tax Credit and the Lifetime Learning Credit were affected by the recent tax deal. In particular, the American Opportunity Tax Credit or the “supercharged” Hope Scholarship Credit, which offers a credit of up to $2,500 has been extended through 2017. Income phase outs – meaning the points at which the credits begin to diminish – were altered for both the American Opportunity Tax Credit and the Lifetime Learning Credit (likely causing most of the delay). Thousands of taxpayers won’t be able to file their individual income tax returns until the beginning of March if they claim the American Opportunity Credit for any student who went to the first 4 years of college during 2012. However, you still have options. You can file your taxes now without claiming the American Opportunity Credit and receive your refund as soon as the IRS releases it. Once the IRS starts accepting form 8863 for efiling, you can amend your tax return and claim the American Opportunity credit by the beginning of March. Keep in mind there might be additional fees to prepare your tax amendment. At Gilman Ciocia, you’ll receive 25% OFF* whatever you paid your accountant last year. And that’s only the beginning. We like saving people money on their taxes - and we’d like to help you. With the economy the way it is, there’s never been a better time to take control of your taxes. Call to schedule an appointment Queens Office: 35-30 Francis Lewis Blvd. Flushing, NY 11358 718-304-2035 www.gtax.com Jim Ciocia, Founder and Chairman *$99 minimum tax preparation fee. Please bring your invoice from last years tax preparation fees. Offer available for 2012 tax returns only. Not to be combined with any other offer. Non-negotiable. No cash value. If you had your taxes prepared by Gilman Ciocia in 2012, you do not qualify for this promotion. This discount must be requested at time of service, no credits will be issued after the tax return has been filed. Offer expires March 31, 2013. Josephine Lam, CPA 136-40 39th Avenue, Ste. 506 Flushing, NY 11354 Tel: 718.888.0988 Fax: 718.888.1011 Email: jlam@jlamcpa.com TAX INFO CORNER American Opportunity Credit Form 8863 is Delayed By: Javier N. Solis Advertorial If you’re taking advantage of other education-related tax breaks, including the tuition and fees deduction and the student loan interest deduction, the delay does not apply to you. Those above-the-line deductions are available to taxpayers who plan to file when tax season opens. Each case is a particular one and has different outcomes. Feel free to contact our offices for additional details. Javier N. Solis is the President and Founder of Los Taxes Network, the First and Only Latino Network of Tax Preparation in America. You can contact Javier directly at JSolis@LosTaxes.com or 718-645-0690. His main office is located at 2812 Fulton Street, Brooklyn, NY 11207
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