Save 50% on your Food Costs? Tax write off idea.

It sounds like those who are afraid to write off a legitimate expense such as a home office are perhaps trying to hide real tax fraud.

I write off my office. I pay my taxes. I don't worry about an audit, because I don't have anything to hide. What in the FUCK could you possibly be doing that your CPA would tell you to leave out a perfectly legitimate deduction?

Am I understanding correctly... leave out the "small stuff" so you can fudge majorly where it counts? I have a really straight laced CPA, so I have never heard many "creative account" options. I just find it really insteresting/confusing why someone would intentionally leave out valid deductions.
 


It sounds like those who are afraid to write off a legitimate expense such as a home office are perhaps trying to hide real tax fraud.

I write off my office. I pay my taxes. I don't worry about an audit, because I don't have anything to hide. What in the FUCK could you possibly be doing that your CPA would tell you to leave out a perfectly legitimate deduction?

Am I understanding correctly... leave out the "small stuff" so you can fudge majorly where it counts? I have a really straight laced CPA, so I have never heard many "creative account" options. I just find it really insteresting/confusing why someone would intentionally leave out valid deductions.

No you are not understanding correctly. I have thousands of transactions, an audit would be more hassle and might end up costing me more (in wasted time and additional CPA fees) than writing off meals and my home office. It has nothing to do with hiding anything.
 
It sounds like those who are afraid to write off a legitimate expense such as a home office are perhaps trying to hide real tax fraud.

I write off my office. I pay my taxes. I don't worry about an audit, because I don't have anything to hide. What in the FUCK could you possibly be doing that your CPA would tell you to leave out a perfectly legitimate deduction?

Am I understanding correctly... leave out the "small stuff" so you can fudge majorly where it counts? I have a really straight laced CPA, so I have never heard many "creative account" options. I just find it really insteresting/confusing why someone would intentionally leave out valid deductions.

Your an idiot to even think this. Certain transactions are known to throw up red flags, one of which is the home office deduction. Also, did you know if you claim this deduction and you sell your house, you have to pay all that back right?

Yeah, not for me. Ive talked to no less then 10 different CPA's in 2 years and 3 estate attorneys and I know whats game and whats not. Im not looking to sell my house anytime in the future and then having to dig thru receipts and tax papers to find that shit and then pay it back in to the government. Also, not worth have that as a red flag and have to dig thru mountains of receipts and loss time either.

No you are not understanding correctly. I have thousands of transactions, an audit would be more hassle and might end up costing me more (in wasted time and additional CPA fees) than writing off meals and my home office. It has nothing to do with hiding anything.

^^ This
 
The only time I write off meals is when I'm "out" of my office, as in a client's paid me to either work at their office, I'm doing a physical consultation and need to eat, at an event, etc. Anything else will get your ass audited simply because you won't be able to justify it through the receipts.

Unless you have 10+ employees, I wouldn't mess with buying your meal every day and writing it off. Even then, most businesses of that size couldn't afford to justify that except once a week (like on a Friday). Those meals, even for large companies, tend to be catered. So, unless you're willing to buy a ton of food in bulk to not look suspicious, think about it some more.


No you are not understanding correctly. I have thousands of transactions, an audit would be more hassle and might end up costing me more (in wasted time and additional CPA fees) than writing off meals and my home office. It has nothing to do with hiding anything.

True. I will say that I've started adding every receipt into GNUcash and describing what it was for, then stapling those receipts to a printed version of each expense report each month. Should save a ton of time later and you'll know what each thing is for and what you were doing at the time you wrote off the meals and what not.

You're going to have to tally all those up each quarter or year anyway, might as well spend a few extra minutes when you're entering them in bulk to make a more memorable description. Most auditors (haven't been audited, but I did work at a bank during high school that had them come in all the time) will just skim through your stuff and if the description makes sense to them they won't look for other stuff.
 
Your an idiot to even think this. Certain transactions are known to throw up red flags, one of which is the home office deduction. Also, did you know if you claim this deduction and you sell your house, you have to pay all that back right?

Yeah, not for me. Ive talked to no less then 10 different CPA's in 2 years and 3 estate attorneys and I know whats game and whats not. ^^ This

That is called depreciation recapture and only applies if you depreciate your home office. Additionally, even if you did claim depreciation - if you changed your home office to somewhere else and retained the property for 36 months, you could then sell it without penalty. 10 CPA's neglected to tell you that?
 
That is called depreciation recapture and only applies if you depreciate your home office. Additionally, even if you did claim depreciation - if you changed your home office to somewhere else and retained the property for 36 months, you could then sell it without penalty. 10 CPA's neglected to tell you that?

Why do you want to keep up two properties for 3 years? I get it if you were renting the other, but 98% of the people want to sell their current home and move somewhere else using that money from the other.

The idea behind an asset is to have it be as liquid as possible. 3 years is a long time and often becomes more of a liability than an asset that way.
 
Why do you want to keep up two properties for 3 years? I get it if you were renting the other, but 98% of the people want to sell their current home and move somewhere else using that money from the other.

The idea behind an asset is to have it be as liquid as possible. 3 years is a long time and often becomes more of a liability than an asset that way.

I get where you are coming from, and I agree that for many people it might be a greater gain in peace of mind and simplicity to forego the home office deductions, especially if it is a small amount of tax savings.

For me, with things as simple as they are (partnership LLC with no other employees) - I guess I'll take the added risk for now.

It just pains me to see people leaving money on the table for uncle sam when they are entitled to it, and sam gets more than his fair share already. Essentially scaring people into paying more than they owe?
 
I get where you are coming from, and I agree that for many people it might be a greater gain in peace of mind and simplicity to forego the home office deductions, especially if it is a small amount of tax savings.

For me, with things as simple as they are (partnership LLC with no other employees) - I guess I'll take the added risk for now.

It just pains me to see people leaving money on the table for uncle sam when they are entitled to it, and sam gets more than his fair share already. Essentially scaring people into paying more than they owe?

I'd imagine home office is a very common expense for very small businesses, so this whole "red flag" thing sounds like a wheeze by the IRS to scare people off doing it and hence increase tax receipts. It's the sort of BS HMRC over here would pull.
 
Why do you want to keep up two properties for 3 years? I get it if you were renting the other, but 98% of the people want to sell their current home and move somewhere else using that money from the other.

The idea behind an asset is to have it be as liquid as possible. 3 years is a long time and often becomes more of a liability than an asset that way.

This
 
I'd imagine home office is a very common expense for very small businesses, so this whole "red flag" thing sounds like a wheeze by the IRS to scare people off doing it and hence increase tax receipts. It's the sort of BS HMRC over here would pull.

Do you not understand one of the largest targets for the IRS is small business owners?

Not only do most of them try to claim expense's they can't claim, but some of them cant afford a real CPA and end up fucking up their taxes each year.

Small business is one of the most audit'd classes the IRS does and the "home business" expense is one of the biggest red flags to that...
 
Q. I have a legitimate home-office expense this year, but I've heard that expense often flags an audit. I have no skeletons to worry about, but I dread the thought of being audited for fear of being buried in paperwork. Should I simply skip the deduction to reduce the risk of an audit? And how much time could an audit actually cost me?

-RANDY ZARECKI

A. Over the years I, too, have heard rumors that taking a deduction for home-office expenses will increase your chances of audit. Having worked with many taxpayers who have claimed home-office-expense deductions, I have seen no evidence that taking a home-office deduction creates additional audit risk. I could not prove this statistically.

I recommend to all my clients who qualify for the home-office deduction that they take it -- but only if they meet the tests they need to pass in order to be entitled to it. The detailed rules for the home-office deduction are found in IRS Publication 587. You may need to become familiar with the "exclusive use" rule, the "regular use" rule and the "principal place of business" rule to determine your eligibility. Because claiming depreciation deductions on your home office may interfere with the tax-free nature of the gain on the sale of your principal residence, I usually recommend not taking depreciation deductions on the home office.

How much time could an audit actually cost you? The answer is another question: How much time will it take you to produce documentation for every dollar you have deducted? If your records are in order, an audit should take very little of your time. If your records are a mess, or you have no records, there is no limit to the amount of time it could take.

MARK S. GLEASON,

ADJUNCT PROFESSOR OF ACCOUNTING,

UNIVERSITY OF ST. THOMAS OPUS COLLEGE OF BUSINESS



Skip home-office deduction to avoid audit? | StarTribune.com
 
I'd imagine home office is a very common expense for very small businesses, so this whole "red flag" thing sounds like a wheeze by the IRS to scare people off doing it and hence increase tax receipts. It's the sort of BS HMRC over here would pull.

The reason that a home office throws up a red flag (and greatly increases your chances of an audit) is that there are some very strict rules you have to follow before you can make a home office claim. Basically you can not use that space for anything else.

Most people ( I have heard as high as 90%) who try and claim a home office do not actually qualify per irs rules. This makes it an easy target for an audit since the irs knows that most of the time they will be able to disqualify the deduction and get some more money.

That is the name of the game for audits, the irs tries to audit people who they think are going to have to give them some money back. Any deductions that have a high percentage of success in this regard are first on the list for audits.
 
The reason that a home office throws up a red flag (and greatly increases your chances of an audit) is that there are some very strict rules you have to follow before you can make a home office claim. Basically you can not use that space for anything else.

Most people ( I have heard as high as 90%) who try and claim a home office do not actually qualify per irs rules. This makes it an easy target for an audit since the irs knows that most of the time they will be able to disqualify the deduction and get some more money.

That is the name of the game for audits, the irs tries to audit people who they think are going to have to give them some money back. Any deductions that have a high percentage of success in this regard are first on the list for audits.

This also falls under why small business owners are high targets for the IRS
 
Most small businesses are incorporated as S-Corps, not C-corps, in order to avoid double taxation. A lot of tax-deductible benefits you're thinking of like employee lunches may only apply to C-corps.

For the love of god, talk to a CPA or even pickup a damn book at the library about tax advantages for business instead of spewing these half-baked ideas on here.
 
i love the amount of CPA's on wickedfire


I was fresh out of an income tax exam when I made that post. We happened to cover business meals in the class.

As for the guy saying only trust a guy who was audited because the IRS was looking into his business meal deductions - uh, good luck.