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Thread: Words of advice to avoid an audit...

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    Moderator charlie61's Avatar
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    Default Re: Words of advice to avoid an audit...

    ^ So even if the bill is like $500 or something, it wouldn't be suspicious or weird for me to hand it over in 50's and 20's? I'd think a tax place like H&R would be like "Uhhh...so did you claim this portion on your taxes too?"

    PS: thank you so much for this thread!

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    Default Re: Words of advice to avoid an audit...

    Quote Originally Posted by charlie61 View Post
    ^ So even if the bill is like $500 or something, it wouldn't be suspicious or weird for me to hand it over in 50's and 20's? I'd think a tax place like H&R would be like "Uhhh...so did you claim this portion on your taxes too?"

    PS: thank you so much for this thread!
    You would not be the first taxpayer to give the treasury cash, nor would you be the last. That being said, DO NOT SEND CASH IN THE MAIL!

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    Default Re: Words of advice to avoid an audit...

    and in the way of an overview, if you are keeping 'professional' level financial records of your dancing earnings, if you are reporting your income to the IRS, if you are paying your quarterly estimated taxes on time etc. then it DOES NOT MATTER whether a bank teller files a 'suspicios activity' report ... whether a supermarket clerk files a money order cash transaction report ... whether a merchant files a cash purchase transaction report etc. Other than the fact that such reports may indeed raise your odds of attracting IRS attention, if your financial 'ducks are in order' there is reall nothing 'bad' that will happen as a result of an audit.

    However, if you are failing to report dancing income, if you are under-reporting dancing income, if you are attempting to claim business expense tax deductions that clearly fail the 'housewife test' etc. then attracting IRS attention is virtually guaranteed to be 'problematic' for you. I use 'problematic' because there are some dancers who still consider it some sort of 'right' to pocket their cash earnings without paying their fair share of taxes, while there are other dancers who consider the dancers who pocket their cash earnings as A. cheating the system, B. giving all dancers a 'bad name' and C. de-facto 'stealing' from every dancer / worker / businessperson who plays by the rules and thus must pay extra taxes to make up for the tax money the IRS did not receive from the dancer who pocketed her cash earnings without reporting them.

    Case in point ... it is extremely likely that I will be audited (again) this year because I have chosen to move outside of the USA in order to ( 100% legally ) shield a good portion of my business and investment income from US taxes. Obviously being forced to remain outside of the USA for 330 days of the year in order to qualify for the ( 100% legal ) foreign income exclusion is not without negative consequences. I sacrificed a whole bunch of things from the ability to see my family frequently to the ability to mow down on some really good pizza and wine by simply walking a block to a comparatively great restaurant. But my move was a calculated decision so I take the bad along with the good. On the flip side, dancers who choose not to report their cash income can still see their family whenever they want and can still enjoy all of the good things that US cities have to offer, and are still paying less in US taxes than I am !

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