The IRS recently announced a simplified way to take a home office deduction – long considered a potential red flag for an IRS audit – that will be available for the 2013 tax year. The new deduction gives taxpayers the option of deducting $5 per sq. ft. for up to 300 sq. ft. of office space, for a total of $1,500.
However, those filing their 2012 tax returns that want to take the home office deduction won’t have this option. Instead, you will still need to file a Form 8829.
While there is no formal list of what may trigger an IRS audit, a recent Forbes.com article lists some likely culprits:
· Not reporting every Form 1099
· Not reporting every form K-1
· Reporting hobby losses on Schedule C
· Over-reporting noncash charitable donations
· Not paying a fair S Corporation wage
· Not keeping good records on real estate losses
· Excessive travel and entertainment expenses
The Flanigan Law Group provides Southern California residents with personal attention for estate planning, administration and litigation legal services. When disputes between families, arise, they are very successful in resolving legal estate issues quickly and efficiently while preserving financial and emotional resources. Contact the Flanigan Law Group at 949-450-0042.