Q: Please enlighten us: When we exercise some of these various techniques to reduce taxes, does that increase the chance that IRS will audit us ??
A: This is a great question; one that I get asked all the time. In fact, I addressed this in my chapter Winning the Game Without Breaking The Rules in CTC’s recently published Bestseller Secrets Of A Tax Free Life: Surprising Write-Off Strategies Most Business Owners Miss.
For example, if you are currently filing as a single-member LLC on schedule C and elect to be taxed as an S Corporation in order to save self-employment taxes on the portion of your profit in excess of your reasonable salary; your risk of being audited is reduced substantially according to IRS most recetly published statistics!In the end it’s all about winning the game without breaking the rules!
Answered by Ron D’Arminio, CPA CTC
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**The answers provided to submitted questions are intended to serve solely as discussion on various tax topics, with the understanding that the publisher and the expert/author are not engaged in rendering legal, accounting, or other professional service and that they are not offering such advice in their responses. They do not constitute legal advice nor are they a substitute for legal counsel. All questions may not be answered.
