Click here to watch or read more information on IRS Back Taxes.<\/a><\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0How to Avoid an IRS Audit like just take it from me I handle lots of audits, not my favorite thing to do but I do handle lots of audits.\u00a0 The reason why it’s not my favorite thing to do is because most of the time they don’t go that well because people don’t have that great of documentation and I can’t just wave a magic wand and make it all go away.\u00a0 So audits are really hard for me to handle because most of the time people’s documentation is not great and some definite adjustments are made.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0I have to give you\u00a0kudo’s\u00a0this is an excellent show today.\u00a0 I don’t know if there is anybody listening that will not want to listen to how to avoid an audit because not everybody has an IRS problem.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Exactly and I would think the only people that would not be interested would be retired people solely living on Social Security, unemployed people I don’t think they have a big chance of being audited at least in this year, in the year that they are unemployed or people who just don’t work for whatever reason you know, they don’t work and they have no source of income.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Well they are probably not listening to talk radio so we are good.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0So we are all good. \u00a0So let’s talk about how does the IRS, how do you win the lottery, the bad lottery, how do you win the bad lottery and get chosen for an IRS audit.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0So understanding the selection process like how do they pick me, pick me for the audit.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Absolutely. \u00a0So the IRS uses a fancy algorithm called the discriminate income function.\u00a0 It’s DIF we are just going to call it DIF.\u00a0 And every person or every tax return is assigned a DIF score.\u00a0 So what I want you to imagine is for every, every position you take on a tax return there’s like boundaries,\u00a0there’s\u00a0things on the low end and\u00a0there’s\u00a0things on the high end.\u00a0 All that in the middle is ok, that\u00a0anything to\u00a0low or too high, usually too high if you are talking about expense deductions, is going to be red flagged by the computer and at some point if you get enough of those red flags then it’s going to kick it in my imagination it kicks it down the audit chute like in the Willie Wonka movies, it just kind of goes down this chute and eventually it ends up on a human beings desk and that person eyeballs it, he looks at the return and he goes yep that’s one that we should send an audit notice on because if that position is that obviously wrong then we probably got problems with the rest of the return.\u00a0 One of the things that I do on every case that comes in that is an audit is I look at the return before I look at the audit letter and the reason that I do that is I’m trying to guess, you know from my own experience, I’m trying to guess which position on this tax return is really the cause of this audit letter and I am almost always right.\u00a0 It’s almost always something that you look at it and you go that number right there….<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Like some big deduction?<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0That number right there is just crazy.\u00a0\u00a0Yeah\u00a0it’s usually a deduction, it can be, we will talk about it later on in the show the different positions you can take that you just really shouldn’t or that they are just ridiculous.\u00a0 But the thing that comes to mind is you know I will give you an example:\u00a0 Remember we talked about a lawyer recently that I represented and her car and truck expense was based on so much mileage that her position basically was she was driving from Tampa to Orlando 5 days a week.\u00a0\u00a0Well\u00a0number 1 if that was commuting that’s not deductible. So if you really were driving from Tampa to Orlando 5 days a week for a job that would probably be characterized as commuting miles but let’s just say….<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0So going to the office versus traveling for work?<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Right exactly so the rule is if you are going to your home from your office that’s characterized as commuting no matter how far it is.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Even if they relocate you?\u00a0 Curious question.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Well if you relocated more I think that it’s more than 50 miles from your residence then the moving expenses can be tax deductible.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Oh so you have to move I got it.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0But in this case she was just driving around to different\u00a0court houses\u00a0and different places where dependent children were and stuff like that and wasn’t you know it wasn’t a 160 miles a day or I forget how much miles she was taking but it was a lot and it was obviously wrong and in my mind that is why I believed that particular return was audited.\u00a0 It turned out ok\u00a0when,\u00a0she got dinged a little bit for the truck expenses.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0So excess miles, that is why she got dinged?<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Yeah she got audited because her mileage, it was just crazy it was just way too high.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Is there any trait that you see that it seems like they get audited more than another?<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0For sure I mean cash businesses for sure are targeted more.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0So restaurants…<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Restaurants, bars and the corresponding jobs that go with those businesses so like waitresses, bartenders,\u00a0hair dressers\u00a0people that survive on a lot of tip income are going to have a higher instance of being audited just because there is a lot of cash running around and that’s one of the reasons the IRS wants, they want to move us more into more of a\u00a0cash less\u00a0society.\u00a0 You remember a few years back, Congress passed this really\u00a0dumb\u00a0law that said that for any transaction between 2 businesses in excess of $600 a year you had to issue\u00a0a 1099.\u00a0 Now at first pause that seems sort of logical and reasonable, it’s not because there is like, I forget how much commerce exists in this country any given year but it’s in the trillions of dollars.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Yeah it’s too much to do it for $600 a pop.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0What happened was the IRS realized that it was going to generate billions of extra 1099’s a year and\u00a0they\u00a0just,\u00a0there\u00a0computer system just couldn’t handle it and then they were just going to choke on all that data.\u00a0 But they are trying to get us to that point where we don’t use currency, we just use plastic, we use debit cards or credit cards or whatever because they kind of….<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Want to regulate everything.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0There opinion of a Utopian society is where every single dollar that you spend can be traced and therefore can be taxed appropriately.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0\u00a0What’s the likely hood of that do you think?\u00a0 I mean we do a lot of\u00a0cash less\u00a0but I don’t see it going away too soon.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0In the next 5 years I think the chances are zero, in the next 10-20 years I think the chances are like nearly 100%.\u00a0 Because well if you watch Science Fiction sort of shows they don’t pull\u00a0green backs\u00a0out of their wallets, they I don’t know they just kind of show up and there is like a chip in their body or something and that is how they pay for things.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0See there is some job security for Ryan after all.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Yeah for sure like get people chipped.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Yeah your son wanted to be an attorney so 20 years from now when he takes over the firm.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0I don’t think it’s going to be 20 years.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Do things a little different.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0It might only be 15.\u00a0 He’s you know he’s on his way.\u00a0 But you know\u00a0 cash businesses get audited quite a bit I mean there are people that say you know doctors, lawyers and even accountants get audited more than other professions, I think it could be, well I’ve seen a lot of funny positions that doctors take and one if the reasons\u00a0is\u00a0and no offense to doctors is a lot of doctors still do their own tax returns, which is a really bad idea and doctors are brilliant, I mean they are really some of the smartest people in our society there’s just things that they should just stick to being doctors.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Well I mean that’s the thing you wouldn’t go to like a CPA to get medical advice no more than you would go to your doctor to get tax advice and you could be super smart but there are laws that change every year.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Yeah for sure every year they are different changes and what not and you just have to rely\u00a0upon\u00a0a professional that keeps up with that stuff.\u00a0 There is actually like sort of a complexity level that I think people should use a professional preparer.\u00a0 At some point it doesn’t pay to do your own return because the 300 bucks or the 500 bucks that you are saving, you are not really saving because you are not taking advantage of deductions that you should be but worse you could be taking deductions that are just absolutely ridiculous but since you are using Turbo Tax and it says you could take it you are going to take it and that’s where that experience and that sort of discretion comes into place using a professional tax preparer.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0And they do look at self-return prepared right, that’s a target, your target versus having a CPA’s number on the bottom of the tax return.\u00a0 They are not really liable but they are held to a certain standard where they are expected to only report correct information.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Yeah I think we’ve talked about this in the past and one of the things that happens is you know there\u00a0is\u00a0little mom and pop sort of tax preparers in the neighborhood, I’m just going to characterize it as in the neighborhood and there not necessarily even a professional they don’t have an enrolled agent certificate, they are not a CPA, they are not a lawyer obviously.\u00a0 There’s a dirty little secret and that is there is no education or special credentials, there’s no test to call yourself an un-enrolled tax preparer.\u00a0 So what I’m saying is……<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0So like a\u00a0book keeper?<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0What I’m saying is anybody can say I’m a tax preparer and that’s….<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0That is scary.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0That is frightening so what happens is the guy in the neighborhood right, so he gets business by word of mouth, he gets businesses by getting people the biggest refunds or has the smallest tax bills.\u00a0 So what happens is there’s continuous pressure on that tax preparer to perform in that way and so word gets around……<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Sing monkey sing.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0And every year he pushes the line just a little bit farther, he just keeps pushing the line and then we end up seeing things like I’ve been seeing recently which is you know\u00a0tax payers\u00a0that are wage earners that get paychecks that have taxes taken out of\u00a0there\u00a0W-2.\u00a0 I mean these guys are putting Schedule C’s on their tax returns with big losses so what that means in simple terms of English is they filed a return with the IRS like that\u00a0tax payer\u00a0had a small business that was losing money to try to offset the tax so that they could get a bigger tax refund.\u00a0 It’s totally illegal, it’s crazy but they can get away with it for a while but what happens is every person who prepares a tax return professionally has what’s called a PTIN, it’s an identification number and what happens is the IRS starts to pick up the anomalies from that\u00a0preparer\u00a0and then they go and they audit every return they ever did.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0So the bottom line\u00a0is look\u00a0for an enrolled agent?<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Either\u00a0look\u00a0for an enrolled agent, law firm or a CPA firm or a reputable company like Jackson Hewitt, Liberty Tax, H&R Block you know the big guys.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0The chains.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Those guys are pretty good I mean they are pretty good at the simpler stuff but you just have to be careful about the neighborhood sort of tax preparer.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Well you are listening to the IRS Solution Attorney show, that sound means we have to take a quick break, we will be back in just a minute.\u00a0 Today’s show is all about How to Avoid an IRS Audit so stick around we will be back in just a minute.<\/p>\n <\/p>\n
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DARRIN T.\u00a0MISH:\u00a0<\/strong>\u00a0Welcome back to the IRS Solution Attorney show I am your host Darrin T. Mish, I am THE IRS Solution Attorney.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0With the Punisher\u00a0cuff links\u00a0and all.\u00a0 I’m your\u00a0co-host Katrina Madewell\u00a0thanks for sticking around with us after the break.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Yeah I do have a cuff link sort of fetish, I like to wear cuff links\u00a0because,\u00a0you know men don’t get to wear that much jewelry right I mean we are kind of limited.\u00a0 Women can dress themselves all up with all kinds of shiny stuff and men are kind of stuck.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0You could do\u00a0it to\u00a0but you might look a little funny.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Yeah exactly you look like Mr. T.\u00a0 I pity the fool.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0So we thought we would talk on today’s show on something that would apply to a lot more of our general audience versus just to only people that have an IRS tax problem and so if you heard the earlier part of our show then you know that the topic for today is How to Avoid an Audit.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Yeah so today we are talking about How to Avoid an IRS Audit.\u00a0 It’s really kind of a Universal topic because I even want to know how to avoid an IRS Audit which is why I look at all my, I mean people come in with Audit letters I always look at their returns and try to figure out what the cause of the audit was so that we could not only prevent that in our practice but I want to prevent that in my returns so that I don’t get audited either.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0And if you missed the earlier part of the show you can catch the whole thing in its entirety on a podcast.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0As well as our new app which is called The IRS Problem Solver and that app is available on iTunes and the Android store.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Awesome and so part of the things in the earlier segment was understanding how you get chosen and who’s likely the target.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Yeah so there are some things, we talked about the DIF score that Discriminate Income Function score and basically every position taken on a tax return is scored and if you score outside of sort of the norms for your industry or your profession then you know you have a lot higher likelihood of being audited.\u00a0 So one of the things or some of the things that could cause audits are large charitable contributions\u00a0that’s\u00a0one thing that is becoming more and more common…<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0What’s considered large? Depending on how much you make?<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0I think the threshold is $250 but…<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0What?<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0If you, you know if it’s just really out of whack and we’ve seen things like Ok the person\u2019s income is $100,000 and they are trying to maintain that their charitable contributions were $40,000.\u00a0\u00a0Well\u00a0that’s kind of an interesting position, not necessarily wrong but be prepared….<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Documents, documents, documents.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Be prepared to be called to the carpet for that.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0We talked about cash businesses too, if your business takes in a lot of cash you may likely be a target which leads us to our third one is Incorporate if you are self-employed.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0So when we are talking about being self-employed here what we are talking about is somebody that gets\u00a0a 1099\u00a0basically.\u00a0 So let’s say you are a plumber and you get\u00a0a 1099\u00a0because you are basically contracting your services out to another plumbing company or maybe more than one plumbing company and they don’t withhold any taxes and you sort of\u00a0get\u00a0dispatched to handle a plumbing problem.\u00a0 What I would suggest is that you go ahead and incorporate and form yourself an LLC or a corporation and the reason is that those returns at least for corporations are audit far less\u00a0then\u00a0Schedule C returns which\u00a0is\u00a0what you file if you are a 1099 self-employed sole proprietor type of person.\u00a0 The last audit stats that I’ve seen for a Schedule C indicate that something like 5% of Scheduled C’s\u00a0are\u00a0actually audited.\u00a0\u00a0 That’s a pretty high rate I mean 5% is a lot.\u00a0 That’s 5 in a 100 people so if we were in an auditorium or something with a 100 people there would be 5 people there that were being audited in any given year, that’s a lot.\u00a0 So that is a really high audit rate.\u00a0 Conversely the 1120S or\u00a0the 1120\u00a0which is what returns that are filed by corporations those are audited in like the 1% range so that one thing could cut your audit risk by an order or magnitude.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0That’s awesome, good little tip.\u00a0 So really for anybody self-employed or getting 1099’s or extra income it’s a good idea for a lot of reasons to incorporate.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Yeah there is liability protection, there is some audit reduction, audit risk reduction.\u00a0 There’s a lot of things that make it a good idea.\u00a0 Now you have to think about the fact that there are additional costs for being incorporated too, there’s some, there’s like an annual fee, you have to pay the state, there’s a tax return, there’s you know an extra tax return that has to be prepared so a lot of….<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0But those things are tax deductible.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Yeah they are.\u00a0 A lot of. let’s say you are making $25,000 on a 1099 and you are just living on $25,000, probably not worth incorporating at that point because you know the risk-reward it seems kind of out of whack and I don’t know where the line is but it’s probably somewhere between 50-100,000 dollars of revenue is probably a good idea to go ahead and be incorporated.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0So the interesting, I was looking at the next thing on our outline number 4\u00a0is include\u00a0explanations and I’m ready to hear about this one.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Yeah so in the past several years, I would say the last decade the IRS is really moved toward the sort of model where they want all tax returns e-filed.\u00a0 Like when was the last time you filed a paper return?<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0I don’t do it at all.\u00a0 But I think it’s been a long time.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0I actually filed one this year for some reasons that for some urgency reasons that I had to go file\u00a0in\u00a0paper\u00a0but it was actually a little bit faster believe it or not that’s kind of weird right.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0That is weird.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0But anyway I had to file\u00a0in\u00a0paper but you know you could include explanations for these kind of duress positions that you are taking\u00a0 so back to our example, the guy, the couple that earned $100,000 a year and they had $40,000 in charitable contributions, if they came to me ahead of time I would definitely do not E-file that return what we want to do is file that in writing on paper and we are going to want to attach our documentation, our proof to the return with a letter of explanation.\u00a0 What you are trying to do there is you are trying to head off, sort of head off the DIF thing, so what is going to happen is because it’s paper filed and there are some other documents there then hopefully the goal would be you are moving that to a human being to eyeball before the computers look at it.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0So when you send the paper\u00a0in\u00a0a physical person gets it versus e-file?<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0That’s my understanding and it has to be manually processed and so the idea would be to just head off the audit before it occurs.\u00a0 There could be lots of reasons why you would have a $40,000 charitable contribution\u00a0with\u00a0a $100,000 income but it’s weird so you want to be able to document why this is\u00a0like\u00a0a one-off kind of thing.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0So I’m sure there is a form right?<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0There’s not.\u00a0 You are just going to have to write a letter and you are going to have to clearly explain….<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0And so do you think that would actually diminish your chance of getting audited?<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Absolutely.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Really?<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0We’ve done things like that in the past.\u00a0 If you go ahead and include the documentation, what you are doing is you are sort of almost like self-auditing in advance.\u00a0 Because you are providing them your documentation.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0So you are saying look I know you are going to look at this funny but let me just tell you right now why I did it and here’s my explanation.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Especially if you are filing a return that’s just really super inconsistent with returns you have filed in the past, that would be another instance where you might want to go ahead and file with paper with it, letter of explanation and try and handle it that way because let’s face it folks getting audited is, it’s really a bad thing.\u00a0 It really is I mean there’s a most, even if you have\u00a0the most perfect\u00a0records, let’s say you use a shoebox and you have you know everything was perfectly right, there’s still you know a physic toll, there’s an emotional toll you know getting the audit…<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>Oh yeah, you just stop everything you are doing…<\/p>\nDARRIN T. MISH:\u00a0<\/strong>Just stop everything you are doing like right now and you have to get all this paperwork and documentation together and you know what happens? Sometimes innocent people…<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Freak out?<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Sometimes innocent people are wronged by the government, it happens all the time.\u00a0 I’ve seen it a million times when I used to be a criminal defense attorney there was plenty of guilty people who were set free and found not guilty but there was plenty of innocent people that were found guilty, the system is not perfect and so you just want to avoid the audit if you can.\u00a0 Some other things that I’ve seen that cause audits regularly would be unreimbursed employee business expenses.\u00a0\u00a0Now\u00a0what are those?\u00a0 Unreimbursed employee business expense is where you are getting a paycheck and for whatever reason you are maintaining that there are expenses that you have to pay which are not reimbursed by your employer.\u00a0 Now thinking about that, that’s actually rather\u00a0rare\u00a0right?<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Yeah.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0It’s rather rare.\u00a0 I can think of a few examples where like you know you work at, work at Culver’s the hamburger stand and you got to wear a uniform and for whatever\u00a0reason\u00a0they don’t provide the uniforms.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Don’t they usually?<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Yeah they usually do but I mean I’m trying…<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0You are saying if they didn’t.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0I’m reaching here to find an example but if they didn’t then you could write off the cost of a couple of uniforms.\u00a0 Not thousands of dollars like a couple of uniforms which is usually like a shirt and some pants and maybe some shoes something like that but most employers are going to handle all of their\u00a0employers\u00a0business expenses and we see it all the time people put these crazy expenses on there, on that line and it just pops out an audit like almost a 100% of the time and if the computers really good then the DIF score for that is low, it’s, those amounts are very low and it’s going to depend on your profession or your occupation.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Do you get to see what the DIF scores are, just kind of curious what the rankings are?<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0No that would be so killer cause you could just always like….<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0I’m thinking like credit score in my head of course.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Yeah no it’s a top secret you know I don’t know.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0They are not telling you the algorithms.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Yeah they are not going to tell you how the algorithms\u00a0 work, you now I’m an old SEO guy, Search Engine Optimization and at one point in time I really had the Google Algorithm figured out and I could make websites rank really high and stuff like that and it’s just the way my brain works and I love, I love to learn\u00a0like\u00a0the framework of the rules\u00a0 and then figure out where all the holes\u00a0 in the armor are, where all the\u00a0chinks\u00a0and stuff are I love that, that is just kind of how my brain works.\u00a0 So if I could figure out the DIF score that would be really awesome for our clients.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0You know at some point you may, you never know.\u00a0\u00a0 So you are listening to the IRS Solution Attorney show we have to take a quick break but today’s topic is all about How to Avoid an Audit and if you missed an earlier part of the show the whole things available via podcast, android or iTunes and you can get it from the app store just search the IRS Problem Solver correct?<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Yep that’s right.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0And if you want to reach Mr. Mish it’s 888-get-mish<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0888-438-6474 that’s 888-438-6474.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Stick around we will be back in just a minute we are going to continue talking about how to avoid an audit.<\/p>\n <\/p>\n
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DARRIN T.\u00a0MISH:\u00a0<\/strong>\u00a0Welcome back to the IRS Solution Attorney show I am your host THE IRS Solution Attorney Darrin T. Mish.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0And I am your co-host Katrina Madewell, thank you so much for sticking with us through the break.\u00a0 Hopefully today’s topic in our show you find a lot of interesting cause I thought the outline was awesome I mean who doesn’t want to hear how to avoid an audit.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0Yeah I even want to hear how to avoid an audit and every day or at least it seems every week I learn a little bit more about how to prepare better returns so people are audited less frequently.\u00a0 Some….<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Some. Go ahead.<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0I was going to say some of those things are just don’t take ridiculous positions, think about it and if you are going to use tax preparation software like Turbo Tax, just be careful, just your kind of have to have some….<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0Common sense…<\/p>\nDARRIN T. MISH:\u00a0<\/strong>\u00a0You have to have some common sense and you got to avoid that number I think it’s in the upper\u00a0right hand\u00a0corner that tells you how much you owe or how much you got coming back and don’t make decisions based on that number, make decisions based\u00a0upon\u00a0the correct answer and at some level you have to have a professional prepare your return otherwise you are just going to stumble in one of these traps, it’s almost inevitable you are eventually going to get audited because you just don’t know what you don’t know.<\/p>\nKATRINA MADEWELL:\u00a0<\/strong>\u00a0The next one on our list is to avoid filing an amendment to your return and I’m thinking about this thinking well I guess a lot of people probably don’t file an amendment, but I’m sure there is a lot of good reasons why you would file an amendment to your return but I had no idea that that might actually trigger or flag you for an audit.<\/p>\n
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