Speaking from the perspective of past experience working
with a client being audited for income and deposits that were made into a bank
account, the answer to your question will greatly depend on the auditor
assigned to work on your case.
If there are any transactions in question that can be backed
up by any type of documentation showing that the deposit was not “income”, then
show that documentation whenever possible.
The auditor may or may not accept it as proof.
For the example you gave regarding taking part of your tax
refund from your wife’s account and depositing into yours, show both the
withdrawal from her account and the deposit into yours. Your other example would be tougher to
substantiate.
Going forward, it is best to have separate accounts for
personal transactions and business transactions. If everything is in one account, the auditor
has to assume that all deposits are income of some sort.
