2006-09-15 14:22:12 · 6 answers · asked by chasmo9592 1 in Business & Finance ➔ Taxes ➔ United States
It depends. If you get a letter from them saying they are questioning one specific item on your schedule C you will most likely be able to respond with a letter stating your position and how you derived at the position (it is also a good idea to send evidence with the letter).
However if you get a true audit of your return, they will want to see receipts, mileage logs for miles, bank statements showing your income (the statements are a good source of evidence showing expenses if you don't have all your receipts as well).
If you are faced with a true audit they will most likely also be examining the rest of your return as well. So be prepared to show evidence for charitable contributions, medical deductions and any other major deductions as well.
Always remember you can challenge there position, you just have to be prepared to back up your position with prior tax cases, or your own evidence. It may be a good idea to consult with a CPA or tax attorney if you feel your in over your head with them.
Hope this helps.
2006-09-16 03:46:31 · answer #1 · answered by newhouse 3 · 1⤊ 1⤋
The examination letter should tell you if they have any thing specific in mind. If not you should be prepared to document every item you have claimed on your Schedule C. Without see the Schedule C it would only be guess what they are interested in. Generally what causes this kind of examination is some area on the Schedule C that is way out of whack with other companies doing the same type of business. For example you are running a lawn care service and you have claimed $20,000 for travel. If you have been honest on all of your deductions and have good records you will have no problem.
2006-09-15 14:48:14 · answer #2 · answered by ? 6 · 2⤊ 0⤋
I disagree with newhouse on one point. If they only asked about the Schedule C, DON'T bring records not related to your Schedule C. If they want records they didn't ask for, they must give you time to produce them. Unless they think there is something to find, they won't waste the effort. Any records you bring, they can examine and may find an excuse to increase your taxes.
2006-09-16 08:22:06 · answer #3 · answered by STEVEN F 7 · 1⤊ 0⤋
You have the right to representation before the IRS! Find an Enrolled Agent (EA) in your area and get real tax advice! An Enrolled Agent is licensed to practice before the IRS. They are knowledgable in taxation and can give you guidance.
2006-09-17 10:30:10 · answer #4 · answered by Angie W 1 · 0⤊ 0⤋
It means your getting audited. You will need receipts and/or cancelled checks to document every decution claimed on your schedule c. dont bring anything or show anything there not asking for, they are so picky on what they will count and what they wont count. always keep records and receipts for at least five years back and dont put anythign on your schedule c that you ant prove with documentation.
2006-09-19 08:08:38 · answer #5 · answered by Terry M 1 · 0⤊ 0⤋
When you go into the IRS office and the little lady comes out and says Mr. chasmo959 can you show me your schedule C.. You say ( hic ) well little lady here it is.....and you flip it out.. she passes out and hits her head on the floor. You sneak out of the office the best that you can.... but in the back of your mind you know that they will be coming after you...... ( hic )
2006-09-15 14:31:32 · answer #6 · answered by Anonymous · 0⤊ 2⤋