EIC Audit Question....?

Question

Here I am on weekend with all these questions and I hope someone can help me!

I've been waiting for my refund since 1/26 and now know I'm under audit. I was given a list of what I need to gather and there is a chance my refund could be released this week, so I have to get this right!

Part of my income is Schedule C and I have to prove this. I do have some cash income and logs of dates received, what I received it for, etc. Now I have a feeling that if I send a copy of this log, it will be questioned....but what do I do?? Some of the income was from a company that closed, so I didn't get a 1099. I want to be honest and report all of my income, but how in the heck do I prove this income?? The thing is....the extra income increases my refund by $50, and I'm tempted to amend it and change it, but wouldn't that be illegal??

I was looking through phone bills and realized I probally qualify for more on the telephone tax refund, but mostly from 04-05. Should I ammend this?

HELP!

I just wanted to add that most of my income is from W-2's, only about $2200 is Schedule C, so I guess I will send this log and hope for the best. The taxpayer advocate made it sound like I had to provide names and addresses of people who paid me cash. I also have to provide proof of expenses...I use half of my phone and internet expenses, but pay both online, are online receipts sufficient???

As far as the telephone tax....what I'm wondering is this....I'm already under audit so they can review the documentation. I was going through old phonebills to make sure my phone expenses were correct and I noticed that in 04-05..I had some huge long distance bills....now from what I understand this telephone refund goes back a few years, so if I request a higher credit based on 04-05 bills, would that be acceptable for 06. I hope I'm asking this right.....

Answer 1

You need to submit the log of Self employment income per their request. If you claimed EIC on your return and you do not substantiate the SE income they will disallow any EIC that you claimed which would reduce any refund and possibly resulting in a Balance owed.

The sooner you get the information back to them that they requested the sooner they can resolve the matter. It will take longer than a week for this to be resolved.

Call the phone number on the letter on Monday, they may allow you to fax the information to them

Answer 2

Your log of cash income should be sufficient documentation of your income, and I think you should be ok unless the 1099's submitted to the IRS are more than you report, which probably wont happen since one went out of business. The additional $50 refund is peanuts....not enough to trigger a review of your taxes, so I would not amend to reduce the income and increase the tax.

Answer 3

If you have a cash receipts journal that properly reflects the monies reported on your Schedule C, you should not have any problems at all. Accurate financial records kept at the time that the income was received or expenses were incurred is sufficient proof for the IRS.

Only you can decide if it's worth amending your return for the added phone tax rebate. It's probably not worth it for $10 or $20. It might be worth it if you're talking about several hundred.

Answer 4

If your self-employment income was close to the amount that results in the MAXIMUM amount of EIC, that could have triggered the audit. As long as you keep good business records as you go, they should be accepted by the IRS. Maintaining separate bank accounts for your business is also a good idea. I don't know if you can amend your return while an audit is in progress. I am positive that trying to do so would look suspicious. As for the telephone tax, if the difference is significant, take those records to the audit and after everything else is resolved, you may be able to have that item adjusted by the auditor.

Answer 5

i dont want you talkingabout my wife and sexd buddy!