Tallie LLC questions 1-31, #17

[Tallie]

17. How can I maximize deductions for legitimate business expenses, such as clothing purchases or reimbursed expenses, while minimizing the risk of tax-related issues or audits for my LLC?

[LindaSh]

Here are publications which will address tax deductions for your business:

Tax Guide for Small Businesses:  https://www.irs.gov/publications/p334

Credits and Deductions for Businesses:  https://www.irs.gov/credits-deductions/businesses

[KimberW]

The most important thing you can do for your business is to keep good records. Keep your receipts in good order. Keep track of the business reason for each purchase and which client it was for. If you are reimbursed for a particular expense, make a note of that as well. Keep your business and personal finances separate -- use different bank accounts. Don't pay for personal expenses with your business account -- even if you later pay it back. It's important to keep the your business's records as professionally as possible.

The more your business expenses might look like personal expenses (clothing, for example), the more important your records will be in the event of an IRS audit. You may not be able to reduce the chances of an audit -- but you will be able to make sure that you are prepared to respond in the event of an audit.

Reporting Self-Employment Business Income and Deductions 

Thank you for participating in this event!

-- KimberW

[Mark_5]

Clothing expenses  for consideration are normally items not worn outside of work.  Items that can also be used as street clothes are not deductible.  They need to be required for your job and unsuitable for everyday wear.

Employee expense reimbursement should fit with the  IRS guidelines  as to deductibility.   The business reimbursements need to be submitted under the Accountable Plan  of the business.  It is a method of reimbursing employees for their work related costs without subjecting the payment to tax. 

With IRS audits there is always the risk, one of the best ways to avoid is to properly document and follow the instructions provided in preparing the return.

[llgrigg]

I received my tax return yesterday from Tax Product Group, but it was more than I expected by about 1300.00 I do not know what to do. But I need some assistance.

Les Grigg

[JotikaT2]

Assuming you received your tax refund and it was higher than you anticipated, the taxing agency, whether IRS or state if applicable, will mail you a letter explaining the reason for the changes to your refund.  

For your federal refund, you have the option of creating and logging into your account with the IRS here to view specifics of your account as well.

@llgrigg