Income Tax Alert
INCOME TAX ALERT
LARGE, UNUSUAL, QUESTIONABLE (LUQ)
They need money desperately and they are coming after us !
LUQ is a common phrase used by the IRS when they review which tax returns to examine.
Each business is different and we will explain what LUQ’s mean to you.
Put all these together and you become a prime candidate for an IRS audit.
The following are some things YOU must do to be ready should the IRS come calling:
- Sales receipts must match bank deposits and you must be able to explain large and unusual deposits.
- Be able to prove and substantiate every expense item on your tax return, invoices, checks, credit card payments and business purpose.
- Keep a log/diary/calendar for your vehicle expenses. The better the proof, the better chance you have of deducting it.
- Keep your personal expenses personal. Do not pay them from your business accounts and don’t pay your business expenses from your personal account.
- Credit cards – have one for your business and a separate one for your personal expenses.
- Document your entertainment expenses with a receipt and the 4 W’s – Who, What, Where and When.
- W-9 forms – have all vendors complete one and send 1099’s at year end.
Honest, straightforward advice using the tax code and our experience to give you every tax break without exposure to the IRS and preparing your returns without LUQ’s.