Seeing the difficulties that tax debt and other tax problems cause taxpayers, Tax Defense Network has made it its mission to prevent tax problems by educating taxpayers about tax law and IRS practices, seen on the company’s LinkedIn profile.
Recently, Jessie Seaman, a senior licensed tax professional and enrolled agent at TDN, was featured in Business News Daily, a comprehensive news and information resource for small business owners and entrepreneurs.
As Tax Defense Network’s business tax expert, Jessie Seaman, who also teaches Business Tax Law for the Business Master’s program at University of Phoenix, knows that the IRS looks for certain red flags when determining which tax returns to audit. And unfortunately, the IRS is looking closer at small businesses this tax season.
“The IRS has switched its focus from large corporations to smaller business entities like sole proprietors, LLCs, partnerships and S-corps,” Seaman told Business News Daily.
Seaman advises small business owners to be particularly careful to keep detailed receipts and records in the following areas:
- Home Office Deduction: The space must be used exclusively for business, the key here is exclusive. If the space is also used by the family for school projects, online shopping, guest room, etc. then the deduction is not available.
- Meals, travel, and entertainment: are subject to strict limitations and require a receipt if over $75. The meal, travel and entertainment expenses must match up with the nature of the business.
- Claiming 100% of vehicle use: and then deducting all expenses sets off bells, especially if the taxpayer files on Schedule and does not have a second car for personal use.
- Hobby vs. Business: If your business loses money every year the IRS will view the activity as a hobby; no losses may be taken for hobbies. A business must net positive income at least three out of the last five years to be considered a business that may take a loss against other income.
- Losses on Rental Property: If the taxpayer’s primary income source is not from real estate, meaning over 50% of their work in the year, or 750 hours, were spent in another field, no loss may be taken. If you are not a real estate professional then be wary of claiming you are simply because you rent a property or two.
Tax Defense Network is a national tax relief company that provides solutions to individuals and small businesses with IRS and state tax debt. TDN has been helping taxpayers since 1997 and is A+ rated by the Better Business Bureau. Its Twitter feed is a source of expert advice and information.