Being audited...

I do have all of my receipts, but what I never got from my own accountant was a very clear list of how to organize them and what could be counted and what couldn't, etc., so that's the part I'm nervous about, since I'm about to come face to face with the authorities about what exactly the officially allowed uses of these receipts are.
By the way, here's some info from Paul Kirby:

We can work together at your convenience. Most clients make an appointment that usually takes about an hour. Appointments can be anytime that's convenient, even evenings or weekends. I ask them to bring their previous year's tax returns, along with current W-2's, 1099's, any other income documents, as well as a listing of items they wish to use as possible tax deductions. If you’re not sure about something, put it in the “not sure” column and bring it. In some cases, clients prefer to email or snail mail their materials and deal with questions over the phone or email.

If you have a business, please separate business expenses (such items as computers, cellphone, etc.) from personal expenses (such as medical, charity, taxes). I would like to see your W-2’s and 1099’s if you have any, but I don’t need expense receipts, only the totals for each category. (Do keep these yourself.) Exception: If you bought any big ticket items (like a computer or a car, for example), I need date of purchase, cost of the item, and percentage business use, even if they were purchased in previous years but you’re still using them for business.

Regarding business expenses: Transportation expenses involve going from one place of business to another, out-of-town travel for business purposes, or going from your home/office to “gigs,” but NOT commuting (traveling from your residence to your principal place of business.) If there are gray areas here, you and I will have to be the judge of what is business travel and what is not. Deductible meals include meals taken at meetings held for business purposes and meals taken when staying out-of-town overnight for business purposes. They are only 50% deductible, so they must be separated from other expenses (hotels, etc.). Out-of-town overnight business travel can also use specific per diem rates for meals rather than actual costs. You are expected to keep a written contemporaneous log of meal and transportation expenses, documenting the expense and business purpose.

A somewhat overlapping category is "office in the home," for those who have an area (it doesn't have to be a separate room) that is used regularly and exclusively for business purposes. If you wish to claim a deduction for office in the home, I will need the total square footage of your home and the square footage used as office. Also, all expenses associated with the home: rent or mortgage interest, utilities, taxes, repairs, maintenance fees if you have a co-op or condo, etc.

If you have a car or van that you use for business purposes, I will need the mileage used for that purpose, mileage used for commuting, and the total mileage used during the year.

Your home telephone is not deductible, even if you keep it in a home office; LD calls for business purposes on this line are deductible, as is a second line used for business. Most clients who have a land line and cell phone use their cell phones for business and deduct them. New item: The IRS now will allow an assumption ("safe harbor") of 75% business use for cellphones unless you document that they are used more or less than that.

Keep in mind, for a musician, any expenses of purchasing stereo equipment, CD's, tickets to concerts, etc., are business purchases and are generally deductible. As an actor, films purchased or viewed, tickets to plays, etc., are business purchases. Similar types of deductions apply to other professions. Exception: The IRS does not allow gym memberships, physical training, etc., as a business deduction, EVEN IF one is a professional athlete, dancer, or other professional who obviously needs or benefits greatly from such memberships or training.

If you need to estimate any of the items above, do your best to be accurate. I will accept whatever you give me, but, if you are ever audited, the IRS will want substantiation. Very round numbers, such as $1,000 for meals, may look suspicious.

Any question that begins with "Do I have to report....?" will be answered "yes". The IRS requires you to report all income, other than small gifts and child support payments. (Sometimes, as in the case of the sale of a principal residence or a gift from a relative, which, if in small amounts, is an exception and need not be reported, the income may be partially or fully excludable from taxation.)

Regarding my fees, most clients pay between $155 and $225, although it can be much less for very simple returns. If you need to call me at any time during the year to ask a quick question, there is no additional charge. I want to encourage my clients to call with questions that will help them to organize their tax matters better, and, possibly, pursue more advantageous tax strategies.

I also send out occasional email "alerts" to inform clients of various deadlines, changes in tax law, etc., that may affect them. The emails are sent out bcc, so no one else receives your email address, and I generally send out 4 or 5 per year at most. Would you like to be included on this list?

Directions for those making an appointment:
1. A train to 190th Street. Take the elevator up; you'll get out on Ft. Washington Ave. Turn left; go one long block to 190th St.; turn right. Go 1 short block to Cabrini Blvd., and turn left. 1st building on the right is 360 - apartment 1D. Buzzer is 1-3-2.
2. By bus: M-4 to 190th St. It stops just past the intersection. Go back to 190th and go right 1 block to Cabrini Blvd., and turn left.
3. By car: Fort Washington Ave. north from 181st St. or GW Bridge to 187th St. Go left to Cabrini Blvd. (next available right) Go one block north on Cabrini.
4. At the apartment lobby, punch 1-3-2 in the telephone pad.

Yours,

Paul H. Kirby
Kirby Tax Services
360 Cabrini Blvd., #1D
New York, NY 10040
212 781-8489
646 249-4382 (cell)
Phkirby@juno.com