Being audited is a big fear for many New Yorkers, especially around this time of year when IRS tax audit letters are being sent for the prior year. It can not only be a long and burdensome process, it can also be quite scary because of the potential penalties involved.
Unfortunately, if you are an on-demand worker, such as a driver for Uber, Sidecar or Lyft, it is almost inevitable that you will be audited at some point in the near future, according to a Forbes.com article.
As the article pointed out, these businesses don’t operate like typical big-name companies because many of the people who work for them are independent contractors, not employees, which creates some unique tax issues.
Namely, while employees have taxes withheld from every one of their paychecks, self-employed workers don’t have any automatic withholding. Instead, they must deal with their own taxes by submitting a proprietorship schedule, Schedule C, with their Form 1040.
The Schedule C is a big audit target for the IRS every year, and it could explode in coming years because of the rise in on-demand workers and startup companies. As more people work as independent contractors and stop getting W-2s from employers, audits could skyrocket.
Any time you are audited by the IRS, you are facing a team of well-trained tax specialists, tax audit examiners, CPAs and tax attorneys, which is why you need your own team to have your back to level the playing field.
Our experienced and knowledgeable tax attorneys can help you put forward your best defense against the IRS no matter what type of audit you are facing or what line of work you are in. Call us today to schedule a free consultation, or keep reading more about tax audits on our website.