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LIKELIHOOD OF BEING AUDITED?

December 07, 2009 02:21PM
I have been self-employed for over 40 years. I was audited exactly once, and not due to self-employment. (It was about the status of a stipend for graduate study. I won.) When my 1099 does not agree with my claimed income from that source, I just print on the tax form, "Difference in income claimed is due to receipt of some funds in early January and will be reflected in next tax year." That has never, ever, brought any scrutiny.

The IRS wants to target its audit activities on "high probability targets." If you show the least evidence that you know what you are doing, they don't want to waste their time on you.

Based in MD, near DC
Shopping from the Carolinas to New York
Have video cam; will travel

Poor customer service? Don't get mad; get video.
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More About Audits
December 07, 2009 05:25PM
I just claim the 1099 income as it comes in and subtract the 1099s from the rest of the fees and claim the balance as non-1099 fees. I don't even bother with an explanation. Obviously if a 1099 came in truly out of whack (for example, they were claiming both my fees and reimbursements as taxable income) I would demand a corrected one, but mostly they have been 'off' one or two fee payments only. But on a Schedule C, line 1 is looking for "Gross receipts or sales" and that is where all income, whether it is from 1099s or not, gets lumped together. On my return I choose to include every penny received from every company for anything on that line because I will reduce the amount later by the reimbursements and other expenses and deductions.
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