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June 2019 Archives

The IRS is increasing 'hobby loss" audits

One of the benefits of owning a business is the ability to take deductions for expenses that are legitimately used in an effort to produce income. Some Georgia businesses end up in the red where expenses exceed income for the particular tax period. If this occurs regularly or in an excessive amount, the attention of the IRS may be triggered. The issue that may arise is the determination of whether the enterprise is in fact a for-profit business or if it is more of a hobby, for which losses cannot be deducted.

Fewer top earners are being audited by the IRS

According to ProPublica, taxpayers in Georgia who make less than $20,000 a year may face the same chance of being audited as those in the 1% of top earners. In many cases, low-income individuals face audits because they claimed the Earned Income Tax Credit (EITC). The EITC audit process is automated, which makes it easier for the government to perform in a timely manner.

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