Cash-based businessesīusinesses that handle a lot of cash routinely (e.g., nail salons, restaurants, car washes, etc.) are subject to the underreporting of income, and even more so in situations where workers make tips. If you are operating a business, treat it that way and ensure you keep proper books and records. If so, then you are limited in the amount of your deductions for expenses relating to activities not engaged in for profit. Generally, if you have not shown a profit from your business in at least three out of five years that you operate your business, then the IRS will view your business as a hobby. Writing off expenses for a business is allowable but writing off expenses for a hobby is not. ![]() If you are claiming the home office deduction, the IRS may ask you to prove your expenses. Even then, the deduction will be disallowed if you don’t actually use the space as an office, don’t strictly maintain the space for business use, or don’t otherwise strictly comply with the rules. Eligibility for the so-called “home office deduction” is generally limited to self-employed individuals and small businesses. Working at home does not automatically mean you can deduct expenses related to your home office and related expenses, like utilities. So, you may have to make estimated tax payments, including paying self-employment taxes. This income must be reported regardless of whether you receive a Form 1099. You must report gross income earned from working a side hustle, like driving a car for Uber or selling items on Etsy. You should keep excellent books and records to substantiate your expenses and business use (e.g., mileage logs or phone app). Therefore, don’t abuse the deduction for meals, entertainment, and mileage expenses by claiming excessive amounts or failing to allocate your personal and business expenses separately. It is easier for income to go unreported and business and personal assets to get comingled when you carry on a business. So, whether you’re paid as an employee or independent contractor, keep track of the forms you receive and report all of your income. If they are not the same, there is a good chance you’ll be audited. The IRS receives a copy of the tax forms you receive, including Forms 1099, W-2, K-1, and others and compares those amounts with the amounts you include on your tax return. ![]() IRS matching programįailing to report all your income is one of the easiest ways to increase your odds of getting audited. So, like any early withdrawal, the IRS is keen to ensure you are reporting and paying tax on retirement plan distributions. If you took advantage of the penalty-free coronavirus-related early withdrawals from retirement plans, you must pay income taxes on these distributions or repay those amounts to an eligible retirement plan within three years of withdrawal. Covid-19-related withdrawals from retirement accounts Reports have indicated that the IRS has increased their enforcement efforts in tracking digital assets transactions by using data analytics and artificial intelligence. If you answer yes, be prepared to substantiate all transaction information. There have been billions of dollars in unreported income annually from digital asset transactions.Īlthough the agency has issued limited guidance in this area, Form 1040 now includes a question asking whether you have engaged in a transaction involving these assets. That’s probably the reason why you see these unreliable TurboTax codes on Reddit so often.Transactions involving digital assets such as Bitcoin, non-fungible tokens, and others continue to be a hot topic for the IRS. It has also become’s also a popular place for affiliates of brands like TurboTax to post coupons and referral codes in the hopes of traffic or even commissions from purchases. Reddit has grown into one of the largest and most active online communities in the world, with millions of users. Other users could then vote on the links, with the most popular content rising to the top of the site. The name “Reddit” is a play on the phrase “read it,” as in, “I read it on Reddit.” The website was initially launched as a simple link-sharing platform, where users could submit links to interesting articles, images, promo codes, and other online content. ![]() So, they talked about creating a platform where people could share and discover new and interesting content easily. Actually, Reddit started in 2005 when two college roommates from the University of Virginia had a discussion about how difficult it was to find interesting content on the internet. I first started looking for TurboTax service codes on Reddit more than a decade ago. I have to assume folks post these codes on Reddit hoping to get some kind of referral credit, or maybe even just a click over to their website. As you can see, all of the TurboTax codes I found on Reddit were expired or just clickbait.
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