Due to a number of recent clients receiving calls claiming to be from the IRS we would like to alert you of this SCAM. You should hang up immediately if you get one of these calls and here is a direct quote from the IRS website regarding the obvious signs you're on the phone with a scammer:
The IRS will never:
  • Call to demand immediate payment, nor will we call about taxes owed without first having mailed you a bill.
  • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
  • Require you to use a specific payment method for your taxes, such as a prepaid debit card.
  • Ask for credit or debit card numbers over the phone.
  • Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.
You may view this information on the IRS website here:
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Tips for Determining Standard Meal Allowances for Business Travel & Entertainment

The cost of certain meals purchased on business trips can be deducted from your taxable income. In fact, this is one of the most common employee and small business expenses claimed each year. When deducting a meal expense, the IRS allows taxpayers to use two different methods: the standard meal allowance or the actual cost of the meal. Follow the tips below to use the standard meal allowance properly.

1. Start by determining if your meals are deductible.

TENot all meals consumed while you are traveling for business are deductible. In general, a meal is deductible if the meal is an essential part of business-related entertainment or if the meal is consumed while you are on a trip that requires you to stop for substantial rest time or sleep in order to perform your duties properly.

2. Understand how the standard meal allowance works.

The standard meal allowance is a calculation method that allows you to deduct meals without keeping records of all of the actual costs you incur. With this method, you are able to use a pre-determined amount to calculate the cost of your daily meals and other incidental expenses while on your trip. This amount is established by the IRS. You can use the standard meal allowance whether you are self-employed or an employee.

3. Use the right amount.

For 2015, the standard meal allowance was $46 per day for trips taken to most locations in the United States before October 1. For trips taken on or after October 1, the standard meal allowance for most locations in the United States was $51 per day. However, some locations qualify for higher meal allowances. To determine the amount of the standard meal allowance for a specific location, you can search by state or city on the United States General Services Administration's website.

4. Apply the limit.

With both the standard meal allowance and the actual cost calculation methods, taxpayers are allowed to deduct only 50 percent of the cost of meals in most cases. For example, if your standard meal allowance is $51 for a given trip, you can typically deduct only $25.50 per day.

5. Keep records anyway.

Keep in mind that even if you use the standard meal allowance, you will still be required to keep records to prove the time, location and purpose of your trip.

6. Don't mix methods.

If you choose to use the standard meal allowance for any trip you take during the year, you must use it for all of the trips you take that year. You cannot use the actual cost of your meals to calculate any travel-related deductions.

7. Compare calculations to get the highest deduction.

In some cases, the standard meal allowance is not the most beneficial calculation method. To determine which method is best for you, consider calculating your deduction both ways to see which is higher.
Calculating meal deductions can be complicated and time consuming. For assistance with travel expense deductions and other tax issues, contact Padgett Business Services.
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How Long Should I Keep My Records After Filing My Tax Return?

The Internal Revenue Service requires you to document the income or deductions you report on your individual or small business tax return. However, once you have used these tax records to complete your return, you may wonder whether you need to keep them and, if so, how long.

paper surrenderWhy Should I Keep My Tax Records?

In most cases, tax returns are processed and accepted without issue. However, on occasion, the IRS will audit your return. Audits can occur shortly after a return is filed, or they can occur several years later. In addition, some people eventually notice that they have completed a tax return incorrectly. When this occurs, you can use your tax records to file an amended return.

Both audits and amended returns must be completed within a specific period after a tax return is filed. This is known as the "statute of limitations."

How Long Should I Keep My Tax Records?

You should keep all of the records needed to validate the information submitted on your tax return at least until the statute of limitations expires. Most taxpayers should keep the records that pertain to their tax returns for at least three years after the return is filed. However, certain types of records should be kept longer. Records that must be kept longer than three years include:
  • Records relating to unfiled returns or fraudulent returns - Keep indefinitely.
  • Records relating to tax years with unreported income that is more than 25 percent of the gross amount reported on your return - Keep for at least six years from the time the return is filed.
  • Records relating to bad debt deductions or a loss from worthless securities. - Keep for at least seven years from the time the return is filed.
  • Employment tax records - Keep for at least four years after the tax is paid or becomes due, whichever is later.
  • Records relating to a claim for a refund or credit that was filed after your tax return - Keep for at least two years from the date you paid the tax or three years from the date you filed your original return, whichever is later.
  • Records relating to property you own - Keep records related to owned property until the statute of limitations for the tax year in which you sold or otherwise disposed of the property expires.

A Word of Caution

Although you may never need your tax records after the statute of limitations has passed, there is always a chance that you will. However, keeping every document indefinitely seems impractical. To balance practicality with preparedness, Padgett Business Services generally recommends keeping all records for at least seven years, regardless of the statute of limitations.
Padgett Business Services can help you determine which records you need to keep and for how long. We can also provide assistance if you have already been audited by the IRS or you need to file an amended tax return. Contact us today.
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Tips for Determining Automobile Allowance for Business Use

Deducting small business expenses is one of the best ways to lower your tax bill. For many businesses and individual entrepreneurs, one of the most advantageous deductions is the automobile allowance. This deduction allows you to reduce your income based on the expenses you incur when using an automobile for business purposes. Follow the tips below...
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Small Biz Builder - June 2016

This Month: Are Retirement Plan Distributions Subject To Withholding? Employing Youth Prepare for Summer Storms!
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Padgett Business Services is your small business accounting, tax, payroll, bookkeeping and finance specialist. We cater to the needs of small business owners.

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Padgett Business Services
1 Harbison Way
Suite 102
Columbia, SC 29212
P: (803) 731-4408
F: (803) 731-4081

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