Monday, August 8, 2022

Pitfalls from Recent IRS Audits - Part 1

Here is Part 1 of Pitfalls from Recent IRS Audits.


1. You diligently kept your mileage log, but the auditor wants more.

We love apps like MileIQ* to help you keep your mileage log, but don’t stop there. Auditors will generally ask for third party documentation showing your odometer reading. They want to see documents from repair shops, oil changes, tire changes that show your odometer reading recorded by a third party. They use this to assess whether your mileage log is reasonable.

 


2. You lost access to account statements.

Most people assume they can get information from the bank or a utility company when they need to. We happily check the box for electronic statements and forget about it. Unfortunately, many online banking platforms won’t let you download statements that more than 12 months old. If your account is still open, you can probably get your bank or utility company to provide older statements and check images, but if your account is closed, it’s possible that you won’t be able to get access to old records. Audits usually happen two years after you file, and a lot can happen in two years. We recommend that you download all of your statements at least once per year. This goes for banks, credit cards, utilities, phone companies, and other similar companies.

 

3. You lost access to an email account or email storage.

We don’t tend to print and store invoices and receipts that are sent to our email. If you don’t have unlimited storage in your email, you may be surprised to find that old emails and receipts were lost because your email provider automatically deleted your emails after a time. If you’re using your email inbox as storage for important documents, make sure those emails will be available to you years later when you need them. Be careful if you’re using a work email address that you’ll potentially lose access to if you change jobs. An app like Dext* allows you to forward emails into its storage system.


* This isn't a paid advertisement for Dext or MileIQ, and we don't get any kickbacks from them. We really do like them!


Find Part 2 here.