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PSA: Be careful with identity thieves trying to take advantage of this situation. Never give out personal info to anyone claiming to be from the IRS over the phone or email. They'll always contact you by mail first.
Anyone else feel like the whole tax system needs a major overhaul? This identity verification stuff is just the tip of the iceberg. π
Careful what you wish for. Knowing the government, they'd probably make it even more complicated π
@StarSeeker test
I went in person for a different issue (identity verification) and they were super helpful, but for reviews/audits they probably won't be able to do much on the spot. Still, they can see notes in your file that you can't see online, so it might give you more info at least. Make sure to schedule an appointment tho - they don't take walk-ins anymore at most locations.
Whatever you do, DON'T IGNORE IT! That's the worst thing you can do with IRS notices. Trust me, I learned that the hard way π
Let's just say ignoring it led to some hefty penalties and a lot more stress than if I'd just dealt with it right away. Don't be like me, kids! π
what letter are you dealing with?
Brady Clean
Another thing to consider - if you're using the cash method of accounting for your business (which most small Schedule C filers do), you would only deduct expenses when you actually pay them. So the store credit approach mentioned above makes sense from that perspective too. If you're using accrual method (rare for small businesses), it gets more complicated and you'd need to properly account for when the expense was incurred vs when the credit was applied.
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Skylar Neal
β’How do I know which accounting method I'm using? This is my first year filing Schedule C and I don't remember choosing anything specific. I just track my income when I get paid and expenses when I pay them.
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Brady Clean
β’You're using the cash method. That's the default for most small businesses and exactly what you described - recording income when you receive it and expenses when you pay them. The accrual method is more complex and involves recording transactions when they're earned or incurred, regardless of when money changes hands. Most Schedule C filers use cash method unless they specifically elected otherwise or have inventory that requires accrual accounting.
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Vincent Bimbach
Wait I'm confused. If Amazon gives me a $10 promotional credit just for being a Prime member and I use it for a business purchase, is that considered a discount (deduct only what I paid) or is it considered income (deduct full amount but report the $10 as income)?
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Ella Harper
β’It's considered a discount, not income. You would deduct only what you actually paid out of pocket after applying the promotional credit. The IRS generally views promotional credits and coupons as price reductions rather than income. You don't need to report the $10 credit as income, and you should only deduct the reduced amount you actually paid for the business item.
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