How can you effectively handle IRS questions about your expense report deductions?

1 Know the rules

The first step to handle IRS questions is to know the rules and requirements for deducting business expenses. The IRS has specific criteria for what counts as a business expense, how much you can deduct, and what records you need to keep. For example, you can only deduct 50% of your meals and entertainment expenses, and you need to have receipts, invoices, or other proof of payment. You also need to show the business purpose, date, location, and amount of each expense. You can find more information on the IRS website or consult a tax professional.

3 Provide accurate and complete information

When you respond to IRS questions, you should provide accurate and complete information that supports your expense report deductions. You should not guess, lie, or omit any details that are relevant to your expenses. You should also not provide more information than necessary or volunteer information that is not requested. The IRS may ask you to send copies of your receipts, invoices, bank statements, calendars, or other documents that show your expenses and their business purpose. You should make sure these documents are clear, legible, and organized.

4 Seek professional help if needed

If you are not sure how to handle IRS questions, or if you face a complex or serious issue, you may want to seek professional help from a tax attorney, accountant, or enrolled agent. These professionals can help you understand your rights and responsibilities, communicate with the IRS on your behalf, negotiate a settlement or payment plan, or represent you in an audit or appeal. They can also help you avoid or reduce penalties, interest, or additional taxes.

5 Review and improve your expense reporting system

After you handle IRS questions, you should review and improve your expense reporting system to avoid future problems. You should make sure you have a clear and consistent policy for your business expenses, and that you follow it. You should also use a reliable and secure software or app to track and record your expenses, and to generate reports that comply with IRS rules. You should also review your expenses regularly and make adjustments as needed.

6 Here’s what else to consider

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