Tax Question

karenkarenn · Postby **karenkarenn** » Thu Apr 09, 2009 11:59 am

Hello,
Didnt know where to post this topic but can we use bank statements instead of receipts from our travel and meal expenses, in our taxes expenses section? Or should we just rely on receipts?
Karen

madelyn · Postby **madelyn** » Thu Apr 09, 2009 12:17 pm

Bank statements work just fine - actually better because they are tied to you, in your name. Receipts cannot be tied the same way. Receipts/bank statements/proof of income and expense retention, by the way, is three years from the date the tax return was due, provided it was filed on time. So next Wednesday, we will be able to shred our 2005 stuff.

Georgerz · Postby **Georgerz** » Thu Apr 09, 2009 12:21 pm

Credit card statements work just fine, too, specially those that include the detail management of your account.

karenkarenn · Postby **karenkarenn** » Thu Apr 09, 2009 12:22 pm

Madelyn,
Im on the phone with the IRS on hold because no one knows how to handle the traveling expense questions.
Would you know:
1. I kept the receipt of gas coming to GG F to see our filly and going home. But do I keep the receipts of gas going to see my partner?
Karen

griff · Postby **griff** » Thu Apr 09, 2009 12:27 pm

I agree with Georgerz and have a "horse" credit card that the bank issued when I opened my "horse" account with them.
Nothing is charged to that account except horse stuff.

griff

karenkarenn · Postby **karenkarenn** » Thu Apr 09, 2009 12:51 pm

Hello,
I have been transfered 7 times while on the phone with the IRS.
Can I dedute the travel expenses to see my partner on the horse?

The IRS DOESNT KNOW! I cant believe that.!

ireneinwa · Postby **ireneinwa** » Thu Apr 09, 2009 1:04 pm

Anything business related....

docjocoy · Postby **docjocoy** » Thu Apr 09, 2009 1:16 pm

Irene is right, anything business related is deductible. But save everything, especially the trip to see your partner about the horse, save phone records, anything to prove you actually drove to see your partner. This helps if/when you are audited. Even if you just write it down, date it, sign it, have your partner sign it, stick it in a folder. You don't have to prove right now that all that stuff is deductible, just document it all for the almost inevitable day when you are audited.

merse · Postby **merse** » Thu Apr 09, 2009 1:43 pm

I've been on that perpetual "on hold," transfer to another Department loop with the IRS before. When I finally got a person that would actually listen to the question I had, the man said "Hmmm, I don't know but if it was me...." at which point I hung up. If they are going to guess, I am definitely not going to follow any answer they provide if it is contrary to my "reasonable man" approach.

karenkarenn · Postby **karenkarenn** » Thu Apr 09, 2009 3:39 pm

Yeah no kidding Merse, I got the same thing. I spent two hours on the phone with them.
Doc- as far as phone conversations. Should I be saving the cell phone bill and have the partner sign it?
Karen

docjocoy · Postby **docjocoy** » Thu Apr 09, 2009 4:21 pm

karenkarenn wrote:Yeah no kidding Merse, I got the same thing. I spent two hours on the phone with them.
Doc- as far as phone conversations. Should I be saving the cell phone bill and have the partner sign it?
Karen

Save the phone bill. You don't have to have the partner sign that because it's a legitimate document. It also helps to keep some form of journal, or just small notes in a small notebook, just of what you do for your racing business. Doesn't have to be a big thing, just a small notation of what you did, like "went to GG fields, saw my horse, met with my partner." You might have your partner sign something like that. You would just keep something like that to help prove that you are not just visiting your partner on vacation and doing nothing with your business. You would only need to show that to an auditor.
You just want to be able to prove all the deductions you take are business related.

griff · Postby **griff** » Thu Apr 09, 2009 5:33 pm

Merse

my recommendatin is you stop wasting your time on hold or talking with IRS "advisors" and spend a couple of bucks with a real tax advisor. and I don't mean H&R Block or Liberty

griff

karenkarenn · Postby **karenkarenn** » Thu Apr 09, 2009 8:10 pm

Any recommendation Griff??
Remember not everyone lives in a large town. We just have HR Block anc Jackson Hewitt. Not exactly what we are looking for as far as Equine tax advisors, but hey if you know something better.. send it our way.
-K

griff · Postby **griff** » Thu Apr 09, 2009 8:58 pm

Any competent CPA can do the job for you and if you are large enough to have H&R block and Jackson hewitt you are large enough to have CPAs.

CPAs cost a little more than H7 R Block and Jackson Hewitt bit are well woth the extra money if you have any kind of business.

griff

madelyn · Postby **madelyn** » Fri Apr 10, 2009 10:09 am

My husband is "our" CPA - :lol:

hey I guess I'm "big enough" to have an "in house CPA" :lol:

Course he lives here too...

Anyhow, he is the one who is our final filter. If you discuss business over lunch, the lunch is deductible. If you drive somewhere business related, all expenses related to that are deductible - BUT!!! the IRS mileage deduction allowance will probably EXCEED your expenses so you might want to use that instead of the gas receipt. The Mileage allowance for business usage of a vehicle includes an allowance for tire treadwear, oil change, vehicle depreciation due to mileage, and wear and tear. It's around 60 cents a mile. So if your trip to see your partner was, say, 300 miles round trip, you get a deduction of $180 while you might have only spent $35 in gas. You are the "self employed" owner of your horse. See this kind of table
http://www.irs.gov/taxpros/article/0,,id=156624,00.html