Affordable Fresh Start Tax LLC A Professional Tax Firm Experts in taxation
I am a former IRS Agent of 10 years and a teaching instructor who taught at the local, regional and district IRS offices.
IRS will try to tell you the National Standards apply and they cannot deviate from that. Do not let them bully you. That is not the case. Below is the direct link from the IRS IRM that gives you power to fight back.
http://www.irs.gov/irm/part5/irm_05-015-001.html#d0e1381
Some of the other expense IRS allows but does not tell you about.
Accounting and legal fees.Your representation fee to process this case. IRS will try to tell you that is not included in necessary expenses however that is not the case. Normal fee range between $2000-$3500, so make sure that is included into necessary and reasonable expenses.
Charitable contributions. If your condition of employment or your job requirement finds that it is required IRS must allow the charitable contribution. I have never had an agent agree on this without pressing on the the manager. The normal IRS Agent does not want to do any more than they have too and this is always a fight.
Child Care (Baby-sitting, day care, nursery and preschool) If it meets the necessary expense test. Only reasonable amounts are allowed. Cost of child care can vary greatly.
Court-Ordered Payments.Alimony, child support, including orders made by the state, and other court ordered payments) If alimony and child support payments are court ordered, reasonable in amount, and being paid, they are allowable.
Dependent Care. For the care of the elderly, invalid, or handicapped.) If there is no alternative to the taxpayer paying the expense.
Education If it is required for a physically or mentally challenged child and no public education providing similar services is available. Education expenses are also allowed for the taxpayer if required as a condition of employment.
Life Insurance If it is a term policy on the life of the taxpayer only. If there are whole life policies, these should be reviewed as an asset for borrowing against or liquidating. Life insurance used as an investment is not a necessary expense.
Secured or legally perfected debts. If it meets the necessary expense test. Taxpayer must substantiate that the payments are being made.
Unsecured Debts. If the taxpayer substantiates and justifies the expense, the minimum payment may be allowed. The necessary expense test of health and welfare and/or production of income must be met. Except for payments required for the production of income, payments on unsecured debts will not be allowed if the tax liability, including projected accruals, can be paid in full within 90 days. Examples of unsecured debts which may be necessary expenses include: Payments required for the production of income such as payments to suppliers and payments on lines of credit needed for business and payment of debts incurred in order to pay a federal tax liability.
Taxes If it is for current federal, FICA, Medicare, state and local taxes. Current taxes are allowed regardless of whether the taxpayer made them in the past or not. Delinquent state and local taxes are allowable depending on the priority of the FTL and/or Service agreement with the state and local taxing agencies.
Optional Telephones and Telephone Services (Pager, Call waiting, caller identification or long distance) If it meets the necessary expense test.
Student Loans If it is secured by the federal government and only for the taxpayer’s education. Taxpayer must substantiate that the payments are being made.
Internet Provider/E-mail If it meets the necessary expense test – generally for production of income.
Never let the IRS bully you, fight back
