Audit Horror = $36K Lost
Download MP3Hi. This is Money Moves for CRNAs made just for 1099s like you. We talk about taxes, smart planning, and how to grow your money, all in simple short episodes. Just remember, these tips are educational and general in nature. For help with your own money plan, chat with a tax or financial adviser.
Bill White:Today's topic, a common problem for many 1099 CRNAs not saving their receipts. Even people like Haron Veras found it tough. Now let's get started. Here's your host Randy Larkin.
Randy Larkin:This Randy Larkin from Atlanta Tax Planner. Today, we wanna talk about keeping your wallet fat by keeping your receipts. We're gonna look at a tax court case that involves Haron Veras. He owned a small trucking business. He worked hard, but he made one big mistake.
Randy Larkin:He didn't write things down or save receipts. And when he got audited by the IRS, things got ugly. Let's walk through what happened and what you can learn so this never happens to you. Rule number one, keep records. The tax law is very clear.
Randy Larkin:If you want to deduct something from your taxes, you need to prove what you spent, why you spent it, that it was for business. If you don't have proof, The IRS doesn't care how honest you are, so keep your records. Cash payments. Haron paid people to help him load and unload his trucks. This sounds normal. Right?
Randy Larkin:But he paid them in cash and didn't write anything down. No receipts, no names, no records at all. The court said, we believe you paid them, but we can't give you a tax deduction if you can't prove it. So Haron lost 16,000 in deductions. Ouch!
Randy Larkin:For cash payments you need proof. Travel and Meals. Haron also tried to write off his travel and meals for his business. But again no records.
Randy Larkin:No notes. No receipts. The court couldn't help him even if it wanted to. The law says you must keep records for travel, meals, cars, and gifts. No records equals no deduction.
Randy Larkin:This cost Haron another $3,900. Miscellaneous expenses. He had $7,200 in miscellaneous expenses. But he gave the court zero information. He didn't explain what they were, no list, no proof, nothing. The court said nope, no deduction.
Randy Larkin:Truck costs. He tried to claim truck expenses too. The court gave him a little bit of credit, like for gas, because they had some evidence to go on. But still he lost almost $9,000 because he didn't keep good records. Medical expenses.
Randy Larkin:Haron had a baby that year and spent $10,000 in medical bills. But again, no paperwork. So the court couldn't help. He lost it all. The final tally.
Randy Larkin:That's $36,000 in expenses. Gone. Poof. Now who will pay extra in income tax, self employment tax which is really Social Security tax and Medicare tax, penalties, interest? Let's say it louder for the people in the back.
Randy Larkin:No records? No deductions? What you should do instead? Here's your action plan. Keep receipts.
Randy Larkin:Write down what the expense is for. Use a notebook, app, or even just folders. Be consistent. You don't have to be perfect, just organized. A final thought.
Randy Larkin:Haron's story is a warning, but it doesn't have to be your story. Stay ready, and tax time won't be scary. You got this.
Bill White:Alright, friends. That wraps up today's show. We hope you learned something new. Head over to crnataxes.com if you want to learn how we help other 1099 CRNAs. And get ready.
Bill White:Our next episode is all about the Roth IRA. You won't want to miss it.
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