AREAS OF IRS INCREASED SCRUTINY CONTINUING IN
TAX YEAR 2011
IRS PAYING SPECIAL ATTENTION TO SUBCONTRACTOR VS EMPLOYEE DEFINITION
The IRS has announced it is going to closely scrutinize sub-contractors as its next enforcement initiative. They will be performing random audits of taxpayers who file business returns. Schedule C-Self-Employed, Corporate, LLC, Partnership and Non-Profit returns are being targeted.
For details, click here.
GUIDELINES FOR CHARITABLE DONATION RECORD KEEPING
The IRS is now requiring that taxpayers have records for all cash charitable contributions.
You need to have either a bank record of the transaction (cancelled check or account statement) or a written statement from a charity documenting the contribution’s amount and date donated.
This means, you cannot deduct the $1.50 in change you give to the Salvation Army. We suggest that you always use checks in place of cash when making charitable contributions if you want to take the deduction.
BEWARE OF THE COMMON DEPENDENT TRAP
If you have a dependent who is also filing a tax return, THEY CANNOT CLAIM THEMSELVES AS AN EXEMPTION. If they claim themselves, then you cannot claim them on your tax return. This will also affect your eligibility to take the education deduction. Please talk with your teenagers and college students before they file their own returns