What’s the all American Dream? Why it’s home ownership of course. According to the Census Bureau, home ownership is at a historic low right now, of only 62.9%. Why? Well after coming off of a huge housing bust, many homeowners lost their homes to foreclosure and bankruptcy. Credit was ruined and lives were ruined. Never […]
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6 Ways to Survive An Audit
Dom dom dom!!! AUDIT! I said it, out loud. Trust me, it’s not like Beetlejuice, where if you say it 3x it shows up. We can talk about audit without that dreaded letter showing up.
When I got that letter last spring, I was like most people. I started sweating profusely, my stomach hurt, I was in a full blown panic attack.
What did they want from me? I don’t make any money? I don’t lie? Why are they doing this? I was a mess.
Then I called my mom. She quickly calmed me down, told me it wasn’t gonna be any big deal. So she said. I didn’t believe it, and was sure this was gonna kill me.
First I had to call them. That was the toughest decision to make. Just willing myself to pick up the phone and call them. Somehow I made excuses to do every other crappy thing on my to-do list I’d been putting off.
Wash the cat? Done. Clean the yard up of dog poop? Done. Get the oil changed? Done. Clean the baseboards? Done
So there I was like a week later, still hadn’t called, just sweating as I picked up the phone and dialed.
And you know what I found out?
The IRS is full of just regular folks doing their job. Folks like us. I talked to Eric, my trusted IRS partner, where we set up an appointment and he advised me of the things I needed to bring in. I was scared of the appointment but relieved that he didn’t sound like a jerk, and didn’t tell me I as horrible and would soon be wearing an orange jumpsuit.
So I gathered all my info and went to meet him a few weeks later. He was a super nice, a family guy with young kids, very easy to talk to, and very helpful. I asked him lots of questions since I’m self-employed and we went over things.
I was extremely grateful that I had done my excel sheet with all my expenses because it made it quite easy to show him where my write-offs came from. He informed me that I needed to make them a little bit more in depth, which I agreed to do, and we set another appointment for a month away.
I did as he asked and met with him again in a month to drop off my paperwork. Now my case is simple, I didn’t make much, and I didn’t have any huge red flags to go over. My meeting with him was always 30 min or less. He told me it would be a few months and he would have my results.
I met him about 3 months later to go over what he’d found. There were a few discrepancies, nothing major, no fines or huge totals owed. I set up a payment plan and Poof! It was all over. Just like that.
Yes it was stressful, yes it took some time, but no, it didn’t kill me. Here are some great tips to make your auditing experience easier and smooth.
- Don’t Ignore the Notice– Remember that part where I kept putting it off cuz I was scared. Well, that’s all fine and good, but I did call before the date on the form. If you ignore it altogether, don’t worry, they’ll find you. And it won’t be pretty. Just make the call and the appointment. It’s much easier than dealing with the repercussions of ignoring it.
- Don’t Lie– Whatever you do, don’t lie to the Federal Government. They are fully expecting to find mistakes on your taxes, heck that might be why you’re there. Things that are general mistakes, or assumed that you didn’t have the knowledge, made a clerical error, or just didn’t know, aren’t going to get you into trouble. I didn’t know that I couldn’t write off 100% of travel food expenses. It wasn’t a big deal, he just did an adjustment, and I learned something new. Lying will only make it worse, and lead to potential larger fines and even punishment.
- Organize Your Records– When you talk to the IRS agent, he/she will tell you what they’re looking for. What year(s) they need to look at. If you’re a terrible bookkeeper and it’s a mess, don’t be afraid to tell them. They will give you time to put together your stuff. And if you don’t have it, start re-creating the records. I didn’t have receipts for my travel records. I was terrified about this, as if he was going to berate me, for such stupidity. Luckily, every expense I wrote off, was on my business bank account records. I spent an entire day, making lists of each expenditure and totally them up for each month. Time-consuming? Yes, but not impossible. Don’t panic, most stuff we can re-create and even find among our paperwork
- Be Nice– This goes without saying. I had heard horror stories of mean, horrible agents. But that wasn’t my case. He was friendly, professional, and easy to deal with. Which is exactly how I was to him. He told me horror stories of dealing with difficult people and it’s a shame because they’re just doing their job. Besides what’s the statement, “you catch more flies with honey?” Just be nice and respectful and chances are you’ll be treated the same.
- Bring Copies of Documents– There will be paperwork, lots of it. But just bring copies. Chances are you won’t be receiving any of your paperwork back, so make sure and bring copies. Keep track of what’s been submitted and what hasn’t. I ended up making an excel sheet, (yes, you know I love excel) and making a list of things I needed to get, along with a check mark when I submitted it. Organization is key to a good audit.
- Consult an Attorney– if you run a substantial business, have failed to pay taxes, or have complicated tax issues, please consult an attorney. They can give you constructive advice on how to proceed, let you know about possible fines, and direct you in your search for documents and info. And you can hire an attorney to handle the entire situation for you. I wish I’d had that option, but I didn’t since I couldn’t afford it.
My biggest wish at the end of this article is that you realize that being audited isn’t the end of the world. Is there a chance they’ll find a mistake(s) or you’ll owe extra money? Sure. Are you going to be ordered into the orange jumpsuit at your meeting and taken away without saying goodbye to the family, probably not? While it’s certainly can be a trying time, you’re simply going thru something that almost every person will go thru at one point in your life. Take a deep breath and breath deep, cuz it’s gonna be ok.
Financial Health and Women
So, I’ve been thinking about this topic a lot ladies. What are we doing? Do I mean literally this second, well kinda, but more figuratively. See I’m a 42-year-old, videographer, turned Realtor. I’ve started again, and it’s scary. Not terrifying, but scary.
I’m poor. I’m like really poor. I’m working non-stop trying to get my Real estate career off the ground. But I’m poor. Sure I do some video work here and there, to stay afloat, but times are tight. I keep in mind the bigger picture though. Where I’m trying to get to and how I’m gonna do it.
My question to most women is, what are we doing to better our lives? See, there’s this little unspoken thing that happens to lots and lots of women that nobody seems to want to talk about.
We give up our power. Now I’m not trying to get totally feminist and over the top, like, “screw men, we don’t need ‘em” I don’t mean that at all.
But what I do notice, is there’s plenty of women that accept a secondary role in their family. They’re cared for, they’re taken care of. It’s not that these women who choose to stay home and raise kids are less, they’re working their butts off. But many have inequality in their relationship when it comes to finances. Maybe they don’t handle the money? Maybe they don’t want to? But why?
My question to you is, where do you want for your life? Because you’re responsible to get yourself there ultimately.
Now I know there’s plenty of people reading this, who say, “whoa, whoa, whoa, are you saying that stay at home mom’s don’t have value, that we’re not equal?” Rest assured, that’s not what I’m saying at all.
What I do want most women to think about is, when we take a back seat to our financial lives, and let our husbands or spouses just take care of it, we lose power. When we’re un or undereducated about our own finances, we’re vulnerable. Very vulnerable.
Hear me out. You can have the greatest marriage and spouse around, but have you ever thought about what would happen if he/she wasn’t there? If he god forbid passed away from illness, or something even like he cheated and you got divorced? We often don’t want to think about these horrible instances but trust me, we aren’t doing ourselves any favors by sticking our heads in the sand.
I know great couples where the wife is a stay-at-home mom, and she has zero clue about their finances. She doesn’t know what they own, how much the electric bill is, how much money is in the bank. In my very humble opinion, that’s just financial suicide. You have to be involved. You have to work together, you have to be part of your financial life. It’s imperative and critical.
Let me give you a couple of examples.
I know a very well educated woman, nurse, that married a doctor. They don’t have children. She slowly started getting more stressed and depressed with work. Her husband, a seemingly decent guy, encouraged her to slow down and even stop working. He made enough to support them both. She slowly declined into a gripping depression and even a substance abuse situation. She was literally dying and didn’t seem to have any confidence in her role in the world. Time passes and it’s revealed that her husband is a serial cheater, along with some much worse character traits. She gets into rehab and proceeds with a divorce. Now she’s left starting over. Trying to get back into a workforce she hasn’t partaken in for the last 4 years. Honestly, it’s the best situation that could have happened to her, her situation was toxic. But she is starting over. Luckily she’s got a great family and is educated, but it’s still starting over. Had she kept her job in the first place, chances are she’d be starting off much stronger on her new journey and probably would have had the guts to leave much quicker. But she lost her power along the way.
Here’s another. Picture this. A mid 50’s women. No college education, never has worked. Married to a very wealthy, and wonderful man for years that took care of her. He paid the bills, he handled all finances. As the years go by, they’ve drifted apart. They divorce amicably after over 30 years together. He’s very generous in his settlement and they go the separate ways. Here she is at 53 years old, and she has no idea how to care for herself. No idea how to balance her checkbook, or even pay the bills. She’s lost.
Now I know these are some unfortunate situations and many feel that they could never be in that spot. But trust me it could happen to anyone.
A few years ago, I found myself in this spot. I was working part-time in my own video business, traveling for work. I was also spending half my time running my boyfriends business. His business made much more money and we were a great team. Then we ran into significant problems. His long-standing sobriety left and he struggled with his demons. After being sober for years, he suffered some debilitating family losses and fell off the wagon. Over a period of 2.5 years, he virtually destroyed his business. Lost his best customer and we almost separated.
All of a sudden, it occurred to me that we were stuck. We weren’t making enough money and my part-time salary wasn’t going to cut. Now I’ve always been a hard worker, but this was a stark realization. I was reliant on a partner for my well being, and if we split, I wasn’t making enough to support myself. It was terrifying. And a wake-up call.
We as women need to be self-reliant. Actually, everyone should be self-reliant. I know that it’s increasingly difficult to make a living if you’re at home taking care of kids, but it’s important to bring in and have skills to bring in as much money as possible.
What’s that saying, “hope for the best, and prepare for the worst.”
There are plenty of work at home jobs, part-time work, online work, blogging, becoming a VA for most women to bring in some extra cash. We need to become self-reliant because life you can throw many curve balls at us, whether we’re ready or not.
So I urge you, tonight sit down with your spouse or loved one, and have an honest talk about your finances. Even if you’re scared or just wanna stick your head in the sand, you need to know every part of them. Go over your investments, debt, and even a budget. Become an advocate for your family and their financial health, you never know when you’re going to need it.
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