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General Contractor B-CA
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Discussion Starter #1
What I'm trying to ask is, when I make a invoice to customer and that customer uses it as a deduction, will that invoice ever comeback to haunt me if didn't claim on my taxes?
 

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Maybe. Contractors are one of the most frequently audited professions.

The IRS is always upgrading its software to spot issues like this.
 

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I own stock in FotoMat!
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What the customer does with the invoice is none of your concern. The only way the IRS would be aware of your invoice is if the customer gets audited. If they did something illegal, then the onus is on them, not you. If you're legit, you won't have anything to worry about.
 
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I own stock in FotoMat!
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So you want to hide income from the irs? Good luck. We’ll watch for you on the news.
How is invoicing a customer considered tax evasion?

Whether the customer uses the invoice to justify a deduction is none of the OPs business.
 

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Custom
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What I'm trying to ask is, when I make a invoice to customer and that customer uses it as a deduction, will that invoice ever comeback to haunt me if didn't claim on my taxes?
I guess you've have to address why you wouldn't claim it on the taxes first to answer the question if you're concerned about that possibility...

People keep receipts and invoices for proof of line items on their returns that are generically listed in nature (i.e. - House Build to reduce their capital gains if they sold as one)...

In addition, there could also be different companies named the same or similar as yours, so unless it's tied to your Tax ID... unlikely...
 

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Focusing on solutions.
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The OP is proposing not reporting the income.
While this is true, 480's response was still correct. How the customer reports their income deductions won't have an effect on the contractor who did, or didn't give an invoice where the IRS is concerned.

My accountant never looks at my invoices, but tells us, we better have an invoice or receipt to back up everything we report to her.
 

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Sean
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I will flip it & say maybe he was asking - if I send an invoice & then agree to a lower amount will I get in trouble if they claim the higher one? Nope as long as you have the final invoice / what was paid.
How about if you are just creating invoices for tax deductions, then yes if caught
 

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You can be put in Prison For obeying the Laws....Let alone for Missing one invoice (psst, they're sequentially # to prevent this)

I'd think anyone EVEN asking this question is A, Bent, and B, seeking a social pardon/ get out of jail card....:jester:

If your moral compass is so poor, maybe trust based contracting under a self taxing system is NOT for YOU.... Don't taste the Meth if you might like it....

work for some one that OBEYS most common laws, And does't ask if committing an on going felony will impact their business any way on a large interNet site.....:whistling

You DO know the IRS PAYS 10-30% for any whistle blowing fines and penalties to the WB eventually?????? but collecting for Foools that post their illegal acts on large forums, might be very difficult.:mad:
 

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america964;7853207if didn't claim on my taxes?[/QUOTE said:
WTF? I'm busting my ass 6 days a week all day every day and every dime I make in entered into my books and reported. Yes taxes are in the equation. (And they take way too much IMO)

Hopefully you are not trying to cheat, and this was just a very dumb (edit "hypothetical") question to pose on the internet.
 

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I fear no man, and generally approach life the same way...but the IRS scares the hell out of me. If you earn it, report it. Then you can sleep at night.

You have to understand that your tax return has a lot of information that must align within expected parameters....as in your deductions for materials vs. total income....mileage, tool expenses, depreciation....all of it need to fit what an auditor may take a look at.

My accountant has said when tax returns are collected, the computer will kick out so many in some pattern for a look by human eyes. The computers look for items that indicate questionable practices....such as the obvious...like having 500k in 1099s reported and you reporting 400k in income. They will come for you immediately. But other returns. as mentioned above, contractors being a prime trade for review....the accountant will see the tax return selected for review and everything needs to look "right" and he will not bother with taking it to the next level. You income should indicate how you live, pay your bills, and pay loans. And they can do math....If your return shows you made $10,000 in one year, after paying all your expenses with business, you can rest assured an auditor will be talking a close to look to see where the money you need to live from may be coming from. Red flag. Lack of income. An auditor has instant access to where you live and your home value, mortgage, credit report, cost of living for your area....so all of this information needs to align with what you file....as my guy says, you don't want an auditor taking more then a minute to look at your return....or they may well print the file and it actually heads in for review, and then is forwarded to the local IRS to call you in and explain.

If you have a lot of credit card bills reflecting travel and vacations, and report 10k in income, you can expect a call. If you have 10k in income and take home office, meal expenses, entertainment, business travel, and those total up to 100k,expect expect a thorough audit.Although I can deduct business lunches and tentertainment, I refuse to go there.

My accountant told me long ago that he would run my taxes any way I wanted....but I had to defend my position...so I rely on him to tell me exactly what to do...and I follow his advice to the letter. No red flags any where, ever. Report honestly, sleep well at night, and fly under the radar, if if it costs you a little more. Others wil tell you to take everything you can and and run the risk, I prefer safety.
 

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One thing I have noticed lately is the 1099 reporting I do seems to get a notice from the IRS frequently now. They will say "abs contracting's" information is not correct, and I need to confirm that the filing information os correct, or lose the deduction. The current letter has 2 subcontractors identified, and I contacted both of them, checked their information and with my accountant and we don't know what is the reason.....
 

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Unreported income is #1 on IRS list to audit, mismatched or counterfeit 1099s is #2 or 3
 
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