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Warning: That "deduct everything" advice cost me a headache with the IRS
I went to a tax workshop for freelancers in Portland last month. Everyone was saying claim your home office, claim your phone bill, claim your coffee meetings. So I did. Claimed my whole internet bill and a chunk of rent. Got audited two weeks ago. The auditor said my deductions were way out of line for my income level - I only made $32k last year. They flagged me because I was claiming 40% of my rent for a spare bedroom I use maybe 10 hours a week. Now I owe penalties. My take? Go easy on deductions unless you really got numbers to back it up. Anyone else get burned by this "claim everything" crowd?
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ray61313d ago
Right, because a coffee-stained notebook is definitely gonna impress the IRS.
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anna71713d ago
Everything in life works better when you actually put in the effort to do it right.
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Did you bring all your receipts and a mileage log? My buddy did the same thing with his home office deduction and the IRS showed up wanting to see his actual hours worked in there. He kept this sloppy notebook with coffee stains everywhere and the auditor basically laughed at it. Definitely learned my lesson to keep real records after watching him scramble.
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