IRS Gestapo Strikes Again
Yes it was tax audit day today. The very nice lady who came to my house has decided that I am a hobby not a business. She cannot see that I am selling anything on my website. I have not made a profit in 2 years. She admits she knows nothing about the internet or ecommerce. I told her I have books for sale and advertising on my web site and blog.
I asked to see the law that states I am a hobby not a business. She pulled out a piece of paper but could not show it to me because there is no law only POLICY. She is not allowed to show that paper to anyone outside the IRS because it is only POLICY.
So this is my notice to all of you who are attempting to grow a business on the internet. Don't bother trying to take any business deductions until you make a profit because if you are audited you will be classified as a hobby. All those people who are telling you to invest in some internet business because it is a legal US IRS deduction need to tell you that you have to make a profit.
She is right about one thing - I do not have a written business plan. I have tried my hand at many things trying to see what will work. I have purchased thousands of dollars in books and courses.
What next - she will be back on March 7th. My bank statements don't add up to my stated income on my tax return. I have to pay the bank $15.00 an hour to research where some deposits came from. It is not good enough to tell her that I refinanced my house at a lower interest rate and had some cash. It is not enough to say I pulled the money from my IRA. I have to prove it. And silly stupid me I can't find that paperwork from 3 years ago. My daughter has to give copies of checks she wrote to me. Another trip to another bank and more money out of my pocket.
This will also affect my 2004 return - that will have to be amended to show that I am only a hobby. Since I had a small refund both years that will mean a penalty and paying back all the money plus interest.
My stress level and my blood pressure are off the chart. Who knew I would have to account for every deposit made to my checking and savings account. Lesson learned - don't deposit your internet earnings to your personal account. If you can't afford to pay the bank charges to have two separate account don't go into business. Even then - keep every record of every gift and in fact make a photo copy of every check and mark it gift and then get an affidavit from the gift giver certifying that the money is a gift.
Funny, my daughter's ex husband has not filed or paid taxes in years. He pays no child support. He seems to be outside the law because they can't find him. They also don't look very hard. I am just trying to earn a living and file my taxes on time every year. I don't cheat I don't lie but it would appear that I can lose what little I have because I am just a hobby.
until next time if there is one - smile through the tears
Sharon
I asked to see the law that states I am a hobby not a business. She pulled out a piece of paper but could not show it to me because there is no law only POLICY. She is not allowed to show that paper to anyone outside the IRS because it is only POLICY.
So this is my notice to all of you who are attempting to grow a business on the internet. Don't bother trying to take any business deductions until you make a profit because if you are audited you will be classified as a hobby. All those people who are telling you to invest in some internet business because it is a legal US IRS deduction need to tell you that you have to make a profit.
She is right about one thing - I do not have a written business plan. I have tried my hand at many things trying to see what will work. I have purchased thousands of dollars in books and courses.
What next - she will be back on March 7th. My bank statements don't add up to my stated income on my tax return. I have to pay the bank $15.00 an hour to research where some deposits came from. It is not good enough to tell her that I refinanced my house at a lower interest rate and had some cash. It is not enough to say I pulled the money from my IRA. I have to prove it. And silly stupid me I can't find that paperwork from 3 years ago. My daughter has to give copies of checks she wrote to me. Another trip to another bank and more money out of my pocket.
This will also affect my 2004 return - that will have to be amended to show that I am only a hobby. Since I had a small refund both years that will mean a penalty and paying back all the money plus interest.
My stress level and my blood pressure are off the chart. Who knew I would have to account for every deposit made to my checking and savings account. Lesson learned - don't deposit your internet earnings to your personal account. If you can't afford to pay the bank charges to have two separate account don't go into business. Even then - keep every record of every gift and in fact make a photo copy of every check and mark it gift and then get an affidavit from the gift giver certifying that the money is a gift.
Funny, my daughter's ex husband has not filed or paid taxes in years. He pays no child support. He seems to be outside the law because they can't find him. They also don't look very hard. I am just trying to earn a living and file my taxes on time every year. I don't cheat I don't lie but it would appear that I can lose what little I have because I am just a hobby.
until next time if there is one - smile through the tears
Sharon
posted by sharono at 1:37 PM
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1 Comments:
Dear Sharon, it is disgusting!
Remember to TAP. You know how.
I am rooting for you. Hug, Ien
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