I work as an independent contractor, and basically use my vehicle as my office. Since my job requires me to travel each day, I keep a majority of my work related items in my vehicle. Unfortunately, this included receipts I have accumulated over the past few years. This past weekend, I visited a friend and noticed that my driver's side window was forced down when I returned to my car. A few items were removed (e.g., CD player face, CD wallet, workshirts, etc.) that I could easily replace. I did not realize that my box of receipts that included thousands of dollars in tax-applicable expenses was taken as well. Many of those receipts consisted of work-related expenditures made payable in cash... What should I do?? If I am eventually audited, I have little in way of proof for my write-offs... I really do not draw cash from the bank, as my cash spending over the last years has come from me selling off personal effects (mainly my old CD and vinyl record collection). Should I call the IRS?
2007-10-23 01:40:44 · 8 answers · asked by hothstation 2 in Business & Finance ➔ Taxes ➔ United States
Make things up, that's what the higher ups who don't pay taxes do.
2007-10-23 01:44:56 · answer #1 · answered by Anonymous · 0⤊ 2⤋
There isn't much you can do now, except to make sure you add those papers in the police report you should have filed.
Next time try to keep all your paperwork filed in a safe place. I am a business owner and I understand exactly what you are talking about, if my office was broken into I'd be into serious trouble if I ever got audited. One option is to scan all your paper documents and make a digital copy but this involves a lot of time.
I'd imagine the thief plans to throw away those documents so check nearby trash bins just to be on the safe side or offer a reward with no questions asked. Call your accountant and let him/her know what happened, usually you can make a pretty good guess as to what deductions you would normally have for that period of time that will save you from paying extra but just be careful not to take more than you think you deserve.
Wish I could be of more help, I would be devastated if this were to happen to me.
Best of luck
2007-10-23 08:51:38 · answer #2 · answered by Phreak W 2 · 0⤊ 0⤋
Certainly keep a copy of any police report which may have been issued concerning this burglary. All you can do, absent these receipts, is to file your income taxes according to your memory of expenditures. Make a written list of what you can recall in expenses as soon as possible, while your memory is as fresh as possible.
Should you get audited, you will, at least, have SOME written evidence of what you are claiming as expense, even though it is not represented by actual original receipt.
If the audit occurs, all you can do is explain as best as possible what occurred, and hope for understanding on the part of the auditor. The IRS is nowhere near as cruel and inhumane as it was once. Generally, a reasoned agreement can be reached in such situations.
2007-10-23 11:22:16 · answer #3 · answered by acermill 7 · 1⤊ 0⤋
I don't think calling the IRS would be particularly helpful, but who knows. I think the best you could do is estimate and then write a note on the tax return (in the notes section) explaining the situation. From what I understand, the IRS is not completely unreasonable: they understand things get stolen. Make sure you file a police report so you have some proof at least that you actually got robbed.
2007-10-23 08:47:34 · answer #4 · answered by Gary B 5 · 0⤊ 0⤋
The IRS will allow you to reconstruct records in situations like this. They do understand that catastrophies occur and will make allowances for this.
One area where you will have problems, however, will be with not passing your funds through your bank account. This is NOT a good practice and will severely limit your negotiating room with the IRS. You should ALWAYS deposit ALL business funds into the bank and write checks against the account or use a credit card for expenses. This gives you backup records that will greatly assist you in dealing with the IRS. The IRS expects you to use sound business practices and running an all cash business and not running the money through a bank is NOT sound practice!
2007-10-23 09:59:09 · answer #5 · answered by Bostonian In MO 7 · 2⤊ 0⤋
No, get your self a very good Lawyer with expertise in Tax Liability/ Business related problems. P.S Get a Safe or fire proof Lock Box to keep important papers in! Remember the IRS is not your friend! Good Luck!
2007-10-23 08:47:23 · answer #6 · answered by maur911 4 · 0⤊ 0⤋
Try to reconstruct as much as you can, as close as you can. Don't go overboard on claiming more than you probably spent.
If you are audited, technically anything you don't have proof of could be disallowed. But if your expenditures for the missing timeframe track reasonably with other years, or the rest of this year, an auditor would very possibly allow them or at least most of them.
2007-10-23 11:20:17 · answer #7 · answered by Judy 7 · 1⤊ 0⤋
Yes, call them and explain. Also, you should report the theft to the police and obtain a crime number/reference as proof, otherwise the IRS could suggest that you were lying and never actually had any records, and you would not be in a position to refute it.
2007-10-23 09:01:10 · answer #8 · answered by ramrod cowfins 3 · 0⤊ 0⤋