hickory nc cpa

CARES Act Tax Relief

We hope that you are keeping yourself, your loved ones, and your community safe from COVID-19. Along with those paramount health concerns, you may be wondering about some of the recent tax changes meant to help everyone coping with the Coronavirus fallout.

Update on the tax-related provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Congress’s gigantic economic stimulus package that the President signed into law on March 27, 2020.

This document is chocked full of information and lenghty!

Recovery rebates for individuals

To help individuals stay afloat during this time of economic uncertainty, the government will send up to $1,200 payments to eligible taxpayers and $2,400 for married couples filing joints returns. An additional $500 additional payment will be sent to taxpayers for each qualifying child dependent under age 17 (using the qualification rules under the Child Tax Credit).

Rebates are gradually phased out, at a rate of 5% of the individual’s adjusted gross income over $75,000 (singles or marrieds filing separately), $112,500 (head of household), and $150,000 (joint). There is no income floor or ”phase-in”-all recipients who are under the phaseout threshold will receive the same amounts. Tax filers must have provided, on the relevant tax returns or other documents (see below), Social Security Numbers (SSNs) for each family member for whom a rebate is claimed. Adoption taxpayer identification numbers will be accepted for adopted children. SSNs are not required for spouses of active military members. The rebates are not available to nonresident aliens, to estates and trusts, or to individuals who themselves could be claimed as dependents.

The rebates will be paid out in the form of checks or direct deposits. Most individuals won’t have to take any action to receive a rebate. IRS will compute the rebate based on a taxpayer’s tax year 2019 return (or tax year 2018, if no 2019 return has yet been filed). If no 2018 return has been filed, IRS will use information for 2019 provided in Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Social Security Equivalent Benefit Statement.

Rebates are payable whether or not tax is owed. Thus, individuals who had little or no income, such as those who filed returns simply to claim the refundable earned income credit or child tax credit, qualify for a rebate.

Waiver of 10% early distribution penalty. The additional 10% tax on early distributions from IRAs and defined contribution plans (such as 401(k) plans) is waived for distributions made between January 1 and December 31, 2020 by a person who (or whose family) is infected with the Coronavirus or who is economically harmed by the Coronavirus (a qualified individual). Penalty-free distributions are limited to $100,000, and may, subject to guidelines, be re-contributed to the plan or IRA. Income arising from the distributions is spread out over three years unless the employee elects to turn down the spread out. Employers may amend defined contribution plans to provide for these distributions. Additionally, defined contribution plans are permitted additional flexibility in the amount and repayment terms of loans to employees who are qualified individuals.

Waiver of required distribution rules. Required minimum distributions that otherwise would have to be made in 2020 from defined contribution plans (such as 401(k) plans) and IRAs are waived. This includes distributions that would have been required by April 1, 2020, due to the account owner’s having turned age 70 1/2 in 2019.

The CARES Act makes four significant liberalizations to the rules governing charitable deductions:

(1) Individuals will be able to claim a $300 above-the-line deduction for cash contributions made, generally, to public charities in 2020. This rule effectively allows a limited charitable deduction to taxpayers claiming the standard deduction.
(2) The limitation on charitable deductions for individuals that is generally 60% of modified adjusted gross income (the contribution base) doesn’t apply to cash contributions made, generally, to public charities in 2020 (qualifying contributions). Instead, an individual’s qualifying contributions, reduced by other contributions, can be as much as 100% of the contribution base. No connection between the contributions and COVID-19 activities is required.
(3) Similarly, the limitation on charitable deductions for corporations that is generally 10% of (modified) taxable income doesn’t apply to qualifying contributions made in 2020. Instead, a corporation’s qualifying contributions, reduced by other contributions, can be as much as 25% of (modified) taxable income. No connection between the contributions and COVID-19 activities is required.
(4) For contributions of food inventory made in 2020, the deduction limitation increases from 15% to 25% of taxable income for C corporations and, for other taxpayers, from 15% to 25% of the net aggregate income from all businesses from which the contributions were made.

Exclusion for employer payments of student loans.

An employee currently may exclude $5,250 from income for benefits from an employer-sponsored educational assistance program. The CARES Act expands the definition of expenses qualifying for the exclusion to include employer payments of student loan debt made before January 1, 2021.

Break for remote care services provided by high deductible health plans.

For plan years beginning before 2021, the CARES Act allows high deductible health plans to pay for expenses for tele-health and other remote services without regard to the deductible amount for the plan.

Break for nonprescription medical products. For amounts paid after December 31, 2019, the CARES Act allows amounts paid from Health Savings Accounts and Archer Medical Savings Accounts to be treated as paid for medical care even if they aren’t paid under a prescription. And, amounts paid for menstrual care products are treated as amounts paid for medical care. For reimbursements after December 31, 2019, the same rules apply to Flexible Spending Arrangements and Health Reimbursement Arrangements.

Business only provisions

Employee retention credit for employers. Eligible employers can qualify for a refundable credit against, generally, the employer’s 6.2% portion of the Social Security (OASDI) payroll tax (or against the Railroad Retirement tax) for 50% of certain wages (below) paid to employees during the COVID-19 crisis. The credit is available to employers carrying on business during 2020, including non-profits (but not government entities), whose operations for a calendar quarter have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings. The credit is also available to employers who have experienced a more than 50% reduction in quarterly receipts, measured on a year-over-year basis relative to the corresponding 2019 quarter, with the eligible quarters continuing until the quarter after there is a quarter in which receipts are greater than 80% of the receipts for the corresponding 2019 quarter.

For employers with more than 100 employees in 2019, the eligible wages are wages of employees who aren’t providing services because of the business suspension or reduction in gross receipts described above.

For employers with 100 or fewer full-time employees in 2019, all employee wages are eligible, even if employees haven’t been prevented from providing services. The credit is provided for wages and compensation, including health benefits, and is provided for the first $10,000 in eligible wages and compensation paid by the employer to an employee. Thus, the credit is a maximum $5,000 per employee.

Wages don’t include (1) wages taken into account for purposes of the payroll credits provided by the earlier Families First Coronavirus Response Act for required paid sick leave or required paid family leave, (2) wages taken into account for the employer income tax credit for paid family and medical leave (under Code Sec. 45S) or (3) wages in a period in which an employer is allowed for an employee a work opportunity credit (under Code Sec. 51). An employer can elect to not have the credit apply on a quarter-by-quarter basis.

The IRS has authority to advance payments to eligible employers and to waive penalties for employers who do not deposit applicable payroll taxes in reasonable anticipation of receiving the credit. The credit is not available to employers receiving Small Business Interruption Loans. The credit is provided for wages paid after March 12, 2020 through December 31, 2020.

Delayed payment of employer payroll taxes. Taxpayers (including self-employeds) will be able to defer paying the employer portion of certain payroll taxes through the end of 2020, with all 2020 deferred amounts due in two equal installments, one at the end of 2021, the other at the end of 2022. Taxes that can be deferred include the 6.2% employer portion of the Social Security (OASDI) payroll tax and the employer and employee representative portion of Railroad Retirement taxes (that are attributable to the employer 6.2% Social Security (OASDI) rate). The relief isn’t available if the taxpayer has had debt forgiveness under the CARES Act for certain loans under the Small Business Act as modified by the CARES Act (see below). For self-employeds, the deferral applies to 50% of the Self-Employment Contributions Act tax liability (including any related estimated tax liability).

Net operating loss liberalizations. The 2017 Tax Cuts and Jobs Act (the 2017 Tax Law) limited NOLs arising after 2017 to 80% of taxable income and eliminated the ability to carry NOLs back to prior tax years. For NOLs arising in tax years beginning before 2021, the CARES Act allows taxpayers to carryback 100% of NOLs to the prior five tax years, effectively delaying for carrybacks the 80% taxable income limitation and carryback prohibition until 2021.

The Act also temporarily liberalizes the treatment of NOL carryforwards. For tax years beginning before 2021, taxpayers can take an NOL deduction equal to 100% of taxable income (rather than the present 80% limit). For tax years beginning after 2021, taxpayers will be eligible for: (1) a 100% deduction of NOLs arising in tax years before 2018, and (2) a deduction limited to 80% of taxable income for NOLs arising in tax years after 2017.

The provision also includes special rules for REITS, life insurance companies, and the Code Sec. 965 transition tax. There are also technical corrections to the 2017 Tax Law effective dates for NOL changes.
Deferral of noncorporate taxpayer loss limits. The CARES Act retroactively turns off the excess active business loss limitation rule of the TCJA in Code Sec. 461(l) by deferring its effective date to tax years beginning after December 31, 2020 (rather than December 31, 2017). (Under the rule, active net business losses in excess of $250,000 ($500,000 for joint filers) are disallowed by the 2017 Tax Law and were treated as NOL carryforwards in the following tax year.)

The CARES Act clarifies, in a technical amendment that is retroactive, that an excess loss is treated as part of any net operating loss for the year, but isn’t automatically carried forward to the next year. Another technical amendment clarifies that excess business losses do not include any deduction under Code Sec. 172 (NOL deduction) or Code Sec. 199A (qualified business income deduction).

Still another technical amendment clarifies that business deductions and income don’t include any deductions, gross income or gain attributable to performing services as an employee. And because capital losses of non-corporations cannot offset ordinary income under the NOL rules, capital loss deductions are not taken into account in computing the Code Sec. 461(l) loss and the amount of capital gain taken into account cannot exceed the lesser of capital gain net income from a trade or business or capital gain net income.

Acceleration of corporate AMT liability credit. The 2017 Tax Law repealed the corporate alternative minimum tax (AMT) and allowed corporations to claim outstanding AMT credits subject to certain limits for tax years before 2021, at which time any remaining AMT credit could be claimed as fully-refundable. The CARES Act allows corporations to claim 100% of AMT credits in 2019 as fully-refundable and further provides an election to accelerate the refund to 2018.

Relaxation of business interest deduction limit. The 2017 Tax Law generally limited the amount of business interest allowed as a deduction to 30% of adjusted taxable income (ATI). The CARES Act generally allows businesses, unless they elect otherwise, to increase the interest limitation to 50% of ATI for 2019 and 2020, and to elect to use 2019 ATI in calculating their 2020 limitation. For partnerships, the 30% of ATI limit remains in place for 2019 but is 50% for 2020. However, unless a partner elects otherwise, 50% of any business interest allocated to a partner in 2019 is deductible in 2020 and not subject to the 50% (formerly 30%) ATI limitation. The remaining 50% of excess business interest from 2019 allocated to the partner is subject to the ATI limitations. Partnerships, like other businesses, may elect to use 2019 partnership ATI in calculating their 2020 limitation.

Technical correction to restore faster write-offs for interior building improvements. The CARES Act makes a technical correction to the 2017 Tax Law that retroactively treats (1) a wide variety of interior, non-load-bearing building improvements (qualified improvement property (QIP)) as eligible for bonus deprecation (and hence a 100% write-off) or for treatment as 15-year MACRS property or (2) if required to be treated as alternative depreciation system property, as eligible for a write-off over 20 years. The correction of the error in the 2017 Tax Law restores the eligibility of QIP for bonus depreciation, and in giving QIP 15-year MACRS status, restores 15-year MACRS write-offs for many leasehold, restaurant and retail improvements.

Accelerated payment of credits for required paid sick leave and family leave. The CARES Act authorizes IRS broadly to allow employers an accelerated benefit of the paid sick leave and paid family leave credits allowed by the Families First Coronavirus Response Act by, for example, not requiring deposits of payroll taxes in the amount of credits earned.

Pension funding delay. The CARES Act gives single employer pension plan companies more time to meet their funding obligations by delaying the due date for any contribution otherwise due during 2020 until January 1, 2021. At that time, contributions due earlier will be due with interest. Also, a plan can treat its status for benefit restrictions as of December 31, 2019 as applying throughout 2020.

Certain SBA loan debt forgiveness isn’t taxable. Amounts of Small Business Administration Section 7(a)(36) guaranteed loans that are forgiven under the CARES Act aren’t taxable as discharge of indebtedness income if the forgiven amounts are used for one of several permitted purposes. The loans have to be made during the period beginning on February 15, 2020 and ending on June 30, 2020.

Suspension of certain alcohol excise taxes. The CARES Act suspends alcohol taxes on spirits withdrawn during 2020 from a bonded premises for use in or contained in hand sanitizer produced and distributed in a manner consistent with FDA guidance related to the outbreak of virus SARSCoV- 2 or COVID-19.
Suspension of certain aviation taxes. The CARES Act suspends excise taxes on air transportation of persons and of property and on the excise tax imposed on kerosene used in commercial aviation. The suspension runs from March 28, 2020 to December 31, 2020.

IRS information site. Ongoing information on the IRS and tax legislation response to COVID- 19 can be found at https://www.irs.gov/coronavirus.

I will be pleased to hear from you at any time with questions about the above information or any other matters, related to COVID-19 or not.

I wish all of you the very best in a difficult time.
Yours Truly

1099 Deadline Fast Approaching

Specific Instructions for Form 1099-MISC
File Form 1099-MISC, Miscellaneous Income, for each person in the course of your business to whom you have paid the following during the year:

  • At least $10 in royalties (see the instructions for box 2) or broker payments in lieu of dividends or tax-exempt interest (see the instructions for box 8).
  • At least $600 in:
    Rents (box 1);
  • Prizes and awards (box 3);
  • Other income payments (box 3);
  • Generally, the cash paid from a notional principal contract to an individual, partnership, or estate (box 3);
  • Any fishing boat proceeds (box 5);
  • Medical and health care payments (box 6);
  • Crop insurance proceeds (box 9);
  • Payments to an attorney (box 10) (see Payments to attorneys, later);
  • Section 409A deferrals (box 12); or
  • Nonqualified deferred compensation (box 14).

You must also file Form 1099-MISC for each person from whom you have withheld any federal income tax (report in box 4) under the backup withholding rules regardless of the amount of the payment.

For COMPLETE  IRS details

Visit the IRS

IRS

For additional help with 1099 preparation….Call our office

828-322-5813

Tax Savings for Business Owners

Very Important information
regarding Tax Savings for Business Owners

Dear Client:

As a business owner, you should be aware that you can save family income and payroll taxes by putting junior family members on the payroll. You may be able to turn high-taxed income into tax-free or low-taxed income, achieve social security tax savings (depending on how your business is organized), and even make retirement plan contributions for your child.

Here are the key considerations:

Turning high-taxed income into tax-free or low-taxed income. You can turn some of your high-taxed income into tax-free or low-taxed income by shifting some of your business earnings to a child as wages for services performed by him or her. In order for your business to deduct the wages as a business expense, the work done by the child must be legitimate and the child’s salary must be reasonable.

For example: Suppose a business owner operating as a sole proprietor is in the 37% tax bracket. He hires his 17-year-old daughter to help with office work full-time during the summer and part-time into the fall. She earns $10,000 during the year (and doesn’t have any other earnings). The business owner saves $3,700 (37% of $10,000) in income taxes at no tax cost to his daughter, who can use her $12,400 standard deduction for 2020 to completely shelter her earnings. Family taxes are cut even if the child’s earnings exceed his or her standard deduction. That’s because the unsheltered earnings will be taxed to the child beginning at a rate of 10%, instead of being taxed at the parent’s higher rate.

What about income tax withholding?

Your business probably will have to withhold federal income taxes on your child’s wages. Usually, an employee can claim exempt status if he or she had no federal income tax liability for last year, and expects to have none for this year. However, exemption from withholding can’t be claimed if (1) the employee’s income exceeds $1,100 for 2020 (and includes more than $350 of unearned income (such as dividends) for 2020), and (2) the employee can be claimed as a dependent on someone else’s return. Keep in mind that your child probably will get a refund for part or all of the withheld tax when he or she files a return for the year.

Social security tax savings, too.

If your business isn’t incorporated, you can also save some self-employment (i.e., social security) tax dollars by shifting some of your earnings to a child. That’s because services performed by a child under the age of 18 while employed by a parent isn’t considered employment for FICA tax purposes.

For example: Let’s say a sole proprietor who usually takes $120,000 of earnings from the business pays $5,700 to her 17-year-old child. The sole proprietor’s self-employment income would be reduced by $5,700, saving her $165.30 (the 2.9% HI portion of the self-employment tax she would have paid on the $5,700 shifted to her daughter). This doesn’t take into account a sole proprietor’s income tax deduction for one-half of his or her own social security taxes.

A similar but more liberal exemption applies for FUTA (unemployment) tax, which exempts earnings paid to a child under age 21 while employed by his or her parent. The FICA and FUTA exemptions also apply if a child is employed by a partnership consisting solely of his parents.

Note that there’s no FICA or FUTA exemption for employing a child if your business is incorporated or a partnership that includes non-parent partners. However, there’s no extra cost to your business if you’re paying a child for work you’d pay someone else to do, anyway.

Retirement benefits. Your business also may be able to provide your child with retirement benefits, depending on the type of plan it has and how it defines qualifying employees.

For example: If it has a simplified employee pension (SEP), a contribution can be made for the child up to 25% of his or her earnings but the contribution can’t exceed $57,000 for 2020. The child’s participation in the SEP won’t prevent the child from making tax-deductible IRA contributions as long as adjusted gross income (computed in a special way) is below the level at which deductions for IRA contributions begin to be disallowed. For 2020, that figure is $65,000 for a single individual.

If you have any questions about how these rules apply to your particular situation, please don’t hesitate to call. Also keep in mind that some of the rules about employing children (such as the maximum amount they can earn tax-free) change from year to year, and may require your income-shifting strategy to change, too.

Very truly yours,
Michael E. Rink

Business Succession Planning
hickory tax services

Do you really want to donate your hard earned money to the IRS?

Do you really want to donate your hard earned money to the IRS?
Probably NOT

…………………………..But if you are trying to do your own taxes online, you may be missing a lot of tax deductions. This is where we come into the picture. Call our office from now to January 1st and we will see if you need our services. No reason to come in until we have a quick chat to see if our services fit your situation. You will be speaking directly with Michael Rink, CPA.

Don’t Delay…it cost you nothing to call ~ except your time.

828-322-5813

charlotte nc cpas

Child Tax Credits

Who qualifies for the Child Tax Credit???
News from the Internal Revenue Service: Taxpayers who claim at least one child as their dependent on their tax return may be eligible to benefit from the child tax credit.

It’s important for people who might qualify for this credit to review the eligibility rules to make sure they still qualify. Taxpayers who haven’t qualified in the past should also check because they may now be able to claim the credit.

Here are some details about this credit:
The maximum amount of the credit is $2,000 per qualifying child.
Taxpayers who are eligible to claim this credit must list the name and Social Security number for each dependent on their tax return.
The child must be younger than 17 on the last day of the tax year, generally Dec 31.
The child must be the taxpayer’s son, daughter, stepchild, foster or adopted child, brother, sister, stepbrother, stepsister, half-brother or half-sister. An adopted child includes a child lawfully placed with them for legal adoption. They can also include grandchildren, nieces or nephews.
The child must have not provided more than half of their own support for the year.
The taxpayer must claim the child as their dependent on their federal tax return.
The child cannot file a tax return for the same year with the status married filing jointly, unless the only reason they are filing is to claim a refund.
The child must be a U.S. citizen, a U.S. national or a U.S. resident alien.
In most cases, the child must have lived with the taxpayer for more than half of 2019.
The IRS Interactive Tax Assistant tool Is My Child a Qualifying Child for the Child Tax Credit? helps taxpayers determine if a child qualifies for this credit.
In some cases, a taxpayer qualifies and gets less than the full credit. These taxpayers must have earned income of at least $2,500 to receive a refund, even if they owe no tax, with the additional child tax credit.
The credit begins to phase out at $200,000 of modified adjusted gross income. This amount is $400,000 for married couples filing jointly.

Taxpayers can use the worksheet on page 6 of Publication 972, Child Tax Credit, to determine if they can claim this credit.

If you have any questions or would like us to review your options with you please feel free to call us, (828) 322-5813.

Tax Day Countdown

This is your reminder countdown to Tax Day! Your personal tax return is due in about one month or less.  It’s NOT too late to have a CPA file your personal taxes. In cases where one or both can’t be filed in time, you can get an extension and file later.

As you are considering what to do, if you have not filed already, don’t rush through doing your own taxes. You will likely save money by having a professional like a Certified Public Accountant prepare your paperwork and filing electronically or sending it by mail BUT DO NOT DELAY!

There is a difference between having all your receipts collected in a shoe box and filing the most advantageous tax return. Your maximized return will include all allowable deductions. That way you can get the heftiest refund or pay the lowest taxes. Using a professional for taxes is a wise decision. You can use your time more productively because even with software, you may miss significant deductions you can take or mistakenly record those you are not entitled to take. In either case, it can lead to pricey errors which may cost you time and money later. Call Rink & Robinson, PLLC for all of your  tax questions.  828-322-5813

Sales Tax and Use Tax Audit

Sales Tax and Use Audits

Handling a Sales and Use Tax Audit
You didn’t ask for it, but you have been selected for and notified of a sales tax audit!  What should I do?Most companies are not regularly audited by the state for sales and use tax purposes, so it is unlikely you have previously handled an audit. While the requested lists of records and documents that will be reviewed appear straightforward, there is much more to handling a sales tax audit. Warning, there are a lot of potential pitfalls during the interaction with auditors that may occur as you address the questions they typically ask.

What You Don’t Know May Hurt You
Importance of getting the facts correct. Addressing the facts seems like a pretty easy task to handle. However, some auditors are good at asking leading questions which support their position. Some state auditors look only for underpayments. Their directive is to get in and out of the field as quickly as possible, and their priority is looking for under-reported sales and use taxes. Therefore, few auditors will inform taxpayers about potential over-payments since they assume you determined internally that tax was due on a transaction. For example, for issues like IT services, some vendors may be conservative and charge sales tax because they are unsure of the proper taxation.

Benefits of Hiring a Tax Professional
Experience with auditor or industry issues. External representatives or sales tax experts are typically involved in many sales tax audits and might have already worked with your assigned auditor. In addition, from an industry perspective, ‘gray’ issues with respect to certain areas or unpublished rulings by the state may exist. An experienced external representative or sales tax expert will be aware of these.

Understanding the transactions in question.
Sometimes auditors will ask taxpayers to gather unnecessary exemption certificates or other documentation. This may cause the company to invest internal resources to secure the information, which might have been avoided based on an external representatives experience and knowledge. Other times, the state might have already audited the other party to the transaction (the customer on the sales side or the vendor on the purchases side). A company may not know internally what should be pursued and how to secure correct documentation.

Settlement authority.
A company may not be aware of internal policies establishing the amount of tax that can be conceded by the auditor or the supervisor to secure a fully agreed case.

Handling Proposed Adjustments

  • If the actual audit results in significant proposed liabilities, you may be compelled to now engage an external professional representative.
  • The auditor believes the audit is complete and may be reluctant to invest more time to address the issues.
  • The auditor might have made concessions during the discussions about the questioned transactions that may not be documented in the report detail. The external representative may not be aware of those discussions.
  •  The external representative may identify new or additional facts that were not presented to the auditor or were not entirely accurate explanations.
  • The auditor may not want or be allowed to include offsets at this stage in the audit.
  • The auditor may want to refer those refunds to an office auditor for review. This can take more time, and there may be an interest rate differential between assessment interest and refund issues in some states.

Tips to Manage Your Sales and Use Tax Audit

Following are some best practices to consider:
1. Communicate with your CPA, a sales tax expert, or other external representative when you are identified for audit. They can discuss the audit process with you, provide some background on various sampling methods, and provide insights on specific industry issues targeted by the state.

2. Even if you are handling the initial audit preparation internally, communicate with the external representative as schedules are shared so he or she is aware of the initial schedules vs. revised schedules.

3. Evaluate whether it is appropriate to perform a refund study/ reverse audit at the same time to identify potential opportunities for refunds.

4. If you opt to use a third party for the preparation and actual audit, make sure you understand the scope of their work and how they will be compensated.

5. Do not engage in contingent fee arrangements on questioned items by the auditor unless you have already made the first pass. Otherwise, you may be paying them on reductions for errors made by the auditor or obvious exempt transactions.

6. If they are doing a refund study/reverse audit, their fee should not be based on savings in periods outside the audit period.

7. Their fee should always be based on offsets actually granted by the state. Payment should be made at the end of the audit, or a provision should be included to reverse any offsets not allowed.

8. Understand whether their services are included only at the audit level or whether services related to appeals or tax court are included.

9. Understand their specific experience with your specific state and your industry.

Ask for references.
A sales tax audit is not an ordinary occurrence. Therefore, you need to invest the proper efforts internally or with external assistance. While you most likely work with an accounting firm that handles your financial audit or tax compliance, they may not have dedicated professionals who specialize in state and local tax matters. Inquire about their experience with sales tax and audit defense issues for your industry in your state being audited. If they do not have the experience, then actively seek out experts through your business contacts at other companies, trade associations, and/or Internet research.

Sales Tax and Use Audits

 

irs hickory nc

Warning Signs NC will Audit Your Personal Tax Return

1. Your Income Is Cash Based

Do you usually deal with cash? Are you in a service industry or perhaps the restaurant business where you often get tips? You might find yourself in an audit of your tax return. The tax office will make sure you calculated all your tips and other cash funds correctly. This will lead to your NC state refund status undergoing a delay.

2. You Claimed Business Deductions

Your state tax office will be more likely to check your return for an audit if you claim business deductions. Every year businesses around the country try to squeeze in various deductions that don’t make sense. The tax office will most likely want to check your return. This can delay your NC state refund status funds.

3. Your Business Deductions Aren’t Reasonable

Like stated above, if you try and put in business deductions that are unreasonable, you’re going to run into problems. It could lead to an audit and a delay on your NC state refund status funds. If you review your calculations and they seem awfully high, you’re probably going to get noticed.

4. You Missed Receipts

Speaking of deductions, make sure you have all the paperwork that goes with them in case of a double check from your state’s tax office. States are cracking down on deductions and such, now more than ever. If you don’t recheck your receipts, you may find yourself in the middle of an audit and a delay in your NC state refund status money.

5. You Miscalculated

Did you check all your calculations on the tax return? Any errors can lead to a big audit from your tax office. This can lead to a huge delay with your NC state refund status funds. Make sure everything is up to speed on your tax return. Check it at least once, preferably twice.

6. Your Refund is Delayed

If you keep looking for the money from your NC state refund status and it never arrives, then you might have been hit with an audit. This isn’t always the case, as North Carolina has had budget problems the past few years. This may be the cause of your delay. However, this could be a warning sign your return is getting a look over.

7. You Owe Back Taxes

Owing taxes to your tax office can flag you for an audit as well. Anything that makes you stand out as a taxpayer can be a problem. This includes owing the office money. They may check all your tax return information and lead to a delay in your NC state refund status.