If you are self-employed and either eat out or drive on the job, chances are you’ll want to deduct what you spend on those things. But meals and car expenses are two of the most likely things on your tax return to get scrutinized by the IRS, and who wants to organize hundreds of receipts for small dollar amounts? An easy alternative is to keep a spending diary — or two or three. A spending diary eliminates the need for you to keep tons of receipts for tiny amounts and is also one of the only spending records the … Read more »
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3.27.2008
Most everyone knows that there are certain common parameters that make you more likely to get audited by the IRS, such as:
making more than $100,000
having low income and high expenses
carrying inventory
claiming high deductions for meals and entertainment, travel, and car expenses
being self-employed and/or claiming a home office
holding a mostly cash-income job, such as waiting tables or bartending
But did you know that the IRS actually uses a very strict formula to determine most of the tax returns that get scrutinized? It’s called the “DIF Score,” (Discriminate Income Function) and while the actual formula is very closely guarded secret, … Read more »