- This topic has 14 replies, 8 voices, and was last updated 2 years, 10 months ago by
.
-
Posts
-
-
So the 2017 tax reform act included the hiring of 87,000 new IRS agents to go after small businesses and the middle class. Has anyone on this forum been audited for their Ebay business? What was the experience like?
I know many of you use a home office deduction but i’ve always heard that that is a “red flag” that will get you an IRS audit.
Just being my usual nervous overly cautious self. This is my first year filing as an Ebay business. Liz
-
-
Never been audited but I assume it’ll happen one day. This is why it’s good to have a system to keep track of expenses and why we suggest having a tax accountant do your filing. We use a local accountant who looks over our info, gets it in order, suggests more deductions, and tells us if something looks like a red flag. A tax accountant knows what’s appropriate and what isnt. If the IRS does audit us, our accountant will be the one to handle the audit.
Home office deduction is not an automatic audit.
On the other hand, plenty of other scavengers swear by doing their own taxes. We just do what helps us sleep at night.
-
Thanks Jay! I do have an accountant that files our taxes. I’m sure everything will be fine! Just wondering what the experience is like for anyone who has been audited.
-
From stories I’ve heard (and what our accountant says), an “audit” is usually the IRS sending letters asking questions about specific parts of a tax return. As long as you are not hiding income or committing fraud, the IRS doesnt call you into their office alone going over the return line by line.
That’s why its good to have an accountant because he/she knows the language to write a letter back with the answer. The worst that may happen is you pay more in taxes if the IRS feels a deduction wasnt properly supported.
Im obviously not a tax specialist. These are good questions to ask your accountant.
-
-
Yeah, I don’t think they’re too worried about small time online sellers at the moment…
https://finance.yahoo.com/news/delays-tax-return-processing-expected-122455827.html
-
Quote from article:
Phone lines have been so overwhelmed that the IRS was only able to answer about 10% of calls last filing season, Bloomberg reported. And as of mid-November 2021, the agency still had a backlog of about 8.6 million returns to process. Normally, the IRS would start a new filing season with a backlog of less than 1 million returns.
-
-
-
I have been audited but not on my ebay business specifically. As others have said, it’s simply a letter you receive in the mail with them usually asking you to verify one of your deductions. It’s not like on tv where characters are running around collecting boxes of receipts. For me, I had a deduction that was under my former married name and I had to prove to them my name change in order to claim the deduction. This happened 3 years in a row.
Currently, I am waiting for the IRS to process my 2019 return. I filed a month early via Turbo Tax but the IRS says I never filed, even though I have a confirmation number stating that the return was accepted. Rather than just stating they didn’t get it, they sent a very confusing letter to me in July asking for some of the tax return but not all of the schedules and W-2s. I then heard nothing. After calling everyone at the IRS, I finally got someone to tell me that they are claiming they never got the stuff I faxed to them back in July. It’s crazy how tight lipped everyone at the IRS is about my OWN return. I feel like I only got the information I got, because I was super friendly and nice to one of the reps but it took me days of calling. The IRS is a mess.
-
A business I owned was audited. It was not just a letter, but the agent came in, looked at the records (QB files), books, etc. In our pre- audit review, we found a couple areas where we owed money– maybe 1000 dollars inaccurately categorized. They worked for 3 at our office days (why they had to be physically on site to look at a QB file? no idea) and found nothing else other than what we found. Colossal waste of tax payer dollars. It probably cost them more money to do the audit than they got back. Really shook the nerve of our new company and left us scratching our heads–Considering all of the very blatant tax fraud I have seen, I couldn’t figure out why we were targeted. I don’t know that I have any advice other than if you keep track of expenses honestly, and with the aide of a CPA filing your taxes reasonably, there isn’t much they can do. My guess is that a ebay type store of the sort we are running is probably small potatoes to them (compared to the biz I had that was audited, totally different type). But who knows. The whole experience left me changed, feeling that the government is not your friend as a business owner.
-
-
When my husband owned a retail business back in the day he built it up with internet sales back when almost no one was selling on the internet. We were a small business but we were doing millions of dollars in sales every year.
One day we got a letter saying we were being audited and (like workhorse reported) an agent looked over our records at our accountant’s office for days and days. We had to pay our accountant his hourly fee to babysit the agent. It was hugely expensive.
When the audit was finally completed our accountant had formed a good relationship with the agent and asked why we were audited. Our accountant was told that the agent was new on the job and it was a training exercise for the agent and auditing a business for training purposes was routinely done.
The IRS picked our business because it fit the profile of the training that was needed. It was not due to any red flags or because the IRS thought we had done anything wrong. My husband is a stickler for taxes and we’d never under reported in any way. In fact our accountant had us overpay so much in taxes we routinely got money back. Of course the agent found nothing, but the IRS knew there was nothing to find anyway.
It seemed really unfair that it cost us thousands of dollars for no valid reason.
-
-
Yes I was audited twice. The first time Turbotax had my son’s birth date and incorrectly let me take a child credit in the year he turned 16. It was a colossal PITA because they also disallowed my younger child’s credit and I won on appeal but gave up and paid hers and never got the money back. Next time they didn’t like that I put my sales as a hobby in one of my early years when I got my first Paypal 1099 (new goods), so I had an accountant redo as schedule c and write a letter. Believe me when I say, it’s not worth doing it yourself even if you understand it. I will always have an accountant do my taxes now just because the IRS is such a mess and you can’t get through.
-
-
- You must be logged in to reply to this topic.