In July 2001, the Internal Revenue Service (IRS) published a new audit techniques guide for examiners that identifies "frequent and unique issues associated with the business consulting industry." The guide was produced under the IRS' Market Segment Specialization Program and lists items like travel, meals, entertainment, and reimbursed expenses among its list of "potential issues."
When the guide was released, publications like CFO.com and AccountingWEB.com warned that consultants' returns would soon come under greater scrutiny. As the April 15 deadline looms, U.S. consultants would do well to make sure their records and deductions are up to snuff. We've gathered some resources from the TechRepublic archives and the Web to help you prepare for tax season.
Help from TechRepublic
TechRepublic has several offerings regarding consultants and their specific tax concerns. Here are three articles concerning your taxes:
- "Keeping the IRS at bay: Tips for avoiding an audit"
- "A friendly reminder: Learn the legalities of tax deductions"
- "Tax deductions for independent consultants"
An IRS audit could be your worst nightmare if you don't know how to respond. Tax Help Online offers advice for those who find themselves the subject of an audit. The site, which sells tax-related publications, includes information about:
- Ground rules you can set for an audit.
- How to call IRS bluffs.
- Proving deductions without a receipt.
- IRS forms that you should never sign.
Other resources we located include the Nolo: Law for All site, which includes a free chapter of attorney Stephen Fishman's book, Working for Yourself: Law & Taxes for Independent Contractors, Freelancers & Consultants.
Adam Starchild, a former consulting firm president turned writer, offers his take in "Taxes and the Independent Contractor" and the "Top Ten Problems with a Home Office," as they relate to tax deductions.
What's your source?
Where do you go to find the simplest explanations for complicated tax laws concerning consultants? Send us the link or post your advice below.