Massage & Bodywork

November/December 2010

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REMEMBER IT ISN'T TOO LATE TO "CUT YOUR 2010 INCOME TAX BILL NOW," AS ILLUSTRATED IN THE ARTICLE ON PAGE 72 OF THE JANUARY/FEBRUARY 2010 ISSUE. ACCESS THE DIGITAL EDITION OF ARCHIVED ISSUES AT WWW.ABMP.COM. work and I was thrilled. We did have to pay interest on the money owed, but it was a small price to pay and I did owe the money. He opted not to charge us a penalty (which he could have) and to not look at previous years (which he also could have). I was so relieved. He then asked general questions like: • Do you get money from any sources like inheritance, trusts, or moneymaking hobbies? • Do you have large stashes of cash at home? • What are your rent/car/ credit card expenses? The goal of the auditor is to determine that all of your numbers make sense. If you claim $30,000 in income and have $45,000 in everyday expenses, obviously something is wrong. This is why you need to be up front with income and expenses. The government is not stupid and will notice if you are living beyond what you claim your means are. Then he asked business- specific questions: • What is your background? • How long have you been doing massage here? • What kind of training is necessary? • How much do you charge? • How many hours do you work a week? • Do you do any trades? (I don't, but did you know you're supposed to claim that as income? Ask your accountant.) Next he looked at my mileage log and was impressed I actually keep a formal mileage logbook. He glanced at my banking, looked at two categories of receipts, and moved on to my husband. I was done in 40 minutes. With the organization of our records, the amount of evidence we presented, and the admitted error we reported (in their favor), the process was smooth and quick. The auditor took another 30 minutes to reconcile the new claim and figure the amount I owed. I wrote him a check and we were done. I almost wanted him to look at everything since we spent so much time gathering it. Had we not prepped the way we did, he surely would have looked more closely at every receipt. He told us that one couple came in with just a garbage bag full of receipts; it took days for their audit. The IRS assumes that if the taxpayer doesn't know the details of the finances, why should the IRS trust the taxpayer's work? My auditor trusted our THE FUTURE Ernie fully believes that my husband and I will be audited again in the next five years. I hope not, but if we are, here's what will be different: I'll check my income that I log against my deposits to make sure I don't miss anything. I'll have my receipts already entered in a spreadsheet and will only have one credit card for business. And though I still don't have a separate business account, I'm taking advantage of the ATM that prints out check pictures on the receipt for all the checks I deposit. If we are audited again, I'll know that it's not malicious and that they're not out to get us. I hope you never have to go through an audit, but if you find yourself at the mailbox holding that envelope, I hope my experience can help you get through it. Perhaps it can give you some ideas to be more organized yourself, whether or not that letter ever arrives. naturopath, and author of The Alternative Medicine Cabinet: Hundreds of Ways to Take Charge of Your Health Naturally (Infinity Publishing, 2010). For more information, visit www. thealternativemedicinecabinet.com. Kathy Gruver is a massage therapist, connect with your colleagues on massageprofessionals.com 67

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