The IRS Audit Blog

Archive for October, 2009

Question: Childcare deduction.?

I paid cash for someone taking care of my son, but have no receipt and have no SSN from the babysitter, I only have her name and address, She does not want go give me her SSN, I am guessing that she does not want to claim this as her income. Can I still be able to file this on my tax return? If IRS audit me, what would be defense with the IRS? Will I get in trouble? P.S. My wife and I both have a full time job, will this be good enough to show the IRS that we definitely pay for someone to take care of our son while we are both at work?

Answer: If you do not provide the name, address, and TIN or SSN of the care provider, the IRS may reduce or disallow the child care credit (not the same as an audit). If you do not provide the information, you must be able to show due diligence in trying to get the information.

/C O R R E C T I O N — BNA Tax & Accounting/

In the news release, Leading Tax Practitioners Explore Research & Development Tax Credit Case’s Impact on U.S. businesses, issued 05-Jan-2010 by BNA Tax & Accounting over PR Newswire, we are advised by the organization that in the last paragraph, the time of the webinar should read “3:00-4:30 pm, ET” rather than “12:30-2:00 pm, ET” as originally issued inadvertently. The complete, corrected …

Joseph and Debbie Wray – Prepaid Legal 2008 LV Presentations

Question: would like to know if I need to file Form 5500?

I am looking for answer on whether I need to file form 5500 for my company.

The company only has 1 employee, me and I am the owner.
I have 401k plan which the company contributes to. The account is less that the 250K ceiling.

The document on the irs website is confusing.

Please, can someone help me out? Thanks.
This is a new company. So far its just 1 employee. In the future, if the company expends, then we need to re-visit this.

So, from the reply so far, it looks like I do not have to file F5500 for this FY. Please correct me if I am wrong. Thanks.

Answer: It really depends on the situation like does the company hold assets for ex employees, total assets and what not. Its sounds like you can definately file the form 5500 EZ which should make it easier.

As a practical matter you shouldnt be doing any of this. so long as you dont intend on having any more employees you should be doing a single member 401k which is just in addition to your SEP (Self employed Pension Plan) It lets you put in 15.5 K on top of approx. 25% of your net income up to 42K which requires no filing.

How To Implement a Profit Sharing Plan

A smart CEO understands that employee performance is tied directly to how vested they feel to the company they work for. That’s why many companies have begun to consider profit sharing plans, because they can be a powerful incentive for employees to work harder for the company and gain a sense of satisfaction from knowing they’ll all get a cut of the profits. It’s also likely that the added …