Browse Tag by College Students

5 Surefire Ways to Get Audited by the IRS

You’re an honest entrepreneur. You run your small business with integrity; you don’t cheat your customers, and you go the extra mile to make sure they’re satisfied. You keep meticulous records, and you work with a qualified accountant and tax professional to make sure you’ve got all of your business’ tax records properly organized and identified.

Yet, even with all of that preparation and good intention, an audit can still happen. When it does, the burden of proof is on you; you need to be able to demonstrate that every expense is legitimate, and answer for every source of income.

There are some specific elements on your tax return that are likely to trigger an audit by the IRS. While we can’t be sure about all of the factors that go into the decision, here are a few that are especially likely:

Request large tax refunds, year after year

This is one of the elements that the IRS uses to flag returns. The IRS uses a computer algorithm to assign a score to every person and business, with a higher score meaning a higher likelihood of having an error. The most common element that triggers this algorithm is having a large tax return every year.

In many cases, these large returns are legitimate; you might have several children, for example, or you might have taken advantage of specific tax rebates, credits, or incentives.

The best way to avoid a large tax return is to make sure you’re not overpaying throughout the year. If you file quarterly taxes, estimate what you owe on the low side. If your spouse works outside of the home, ask him to lower the amount of withholding in his check.

That doesn’t mean you should purposely not take deductions or credits, of course; just understand that doing so year after year can, eventually, lead to an audit.

Show a high ratio of expenses to revenue

If your business is making money but just barely, this sends a message to the IRS that something is probably amiss. If you have a business loss for several years in a row, for example, the IRS considers what you’re doing a hobby rather than a business.

Look at the ratio of expenses that you’re claiming for your business compared to revenue. If it leaves little profit, or even large profits but little in proportion to expenses, you’re likely to trigger an audit.

The best way to avoid this is to track the ratio of expenses to revenue closely. After a few years, there should be an ever-widening gap. If not, you may find yourself sitting across the table from an IRS agent.

Have significant changes from one year to the next

 One thing the IRS system looks at is consistency. It operates on the assumption that each individual or business is going to be in a similar situation, from the tax perspective, from one year to the next.

This isn’t always realistic, of course, but it is a statistical probability. If your business suddenly takes off, takes a nose dive, or if you radically alter your business such that it dramatically changes all of your tax-related metrics, it could trigger an audit.

Provide incorrect data

Providing incorrect data regarding your social security number or the social security numbers of employees or family members can trigger an audit. Forgetting to report, or incorrectly reporting, information from a W-2 or 1099 will do the same.

This is one of the easier mistakes to avoid. Go through your tax return, line by line, and make sure that every number matches up the way it’s supposed to.

Not paying your tax bill

If you send in a lower amount than what you actually owe in taxes without offering an explanation, you’re probably going to face an audit. The IRS is going to do a more complete investigation of your tax return.

You can avoid this by filing a Form 9465 along with your tax return. This form is a request to pay your tax bill in installments. You’ll still be facing some fees and penalties for paying past the due date, but you’ll be able to pay off your tax burden over time – and avoid triggering an audit.

Even if you’ve been completely honest on your taxes, an audit can cost you. The burden of proof is on you, and so in many ways you’re at the mercy of the IRS. Don’t give the IRS a reason to look more closely at your taxes. Avoid these triggers whenever possible.
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11 Money Management Tips For College Students

Most college students are very poor at money management and I know that since I myself am a college-goer who finds money management a difficult task. College is the time when you feel like having all the cool stuff in the world – but you never have the money for it. Money management is an essential life skill that one must learn in college years – when parents have little control on where you spend it. Because once you are working, you are anyway going to be on your own.

In this post I have discussed 11 tips on money management for college students.

Know Your Blind Spots: When it comes to spending money, a person has many blind spots. You may know that you are spending money daily on it, but you might not be aware of how much it really costs you monthly. It is very important that you estimate how much each of your daily expenditures cost you in a month.

Eliminate The Vices: It is kind of dumb to ask college students not to drink or smoke. However, quitting smoking is definitely a great way to make huge savings. Having a drink or two on friday nights is fine though, provided you do not overdo it. You will be amazed how much more money you have saved by eliminating or reducing your expenditures on vices.

Do Market Survey Before You Buy Expensive Things: When you have decided to buy something expensive, especially in the case of electronic gadgets like cell phones – always do a market survey. Ask around other shops for their prices and talk to other people on how much they paid for it. Then finally zero in on a shop to buy it from. Getting good deals will automatically help you improve your savings account.

Sketch A Savings Plan: It is always a great idea to sketch out your own savings plan. You can either decide to put aside some money each month or you can save a few bucks daily. The decision is yours and the amount you want to save is also your choice.

Record Daily Expenses: This is a very good habit, if you are really serious about money management. It is a little difficult to follow thrugh but the rewards are always great. You can keep a notepad and fill it up with details of each buck spent every day. Do it regularly and you can find expenditures where you can trim from the following month.

Prefer Your College Mess: This tip is again out of personal experience. If you are one of those students who hates the college canteen/mess food then you spend a lot eating outside. Again, I think eating out is okay but it is expensive to eat outside every day. Prefer your college mess – it is almost always ridiculously cheap compared to anywhere else and the food is nutritious enough. Although I agree that the taste might not really be one of the positives.

Make A Budget: This need not be a very complicated array of numbers. A serious and feasible figure on how much you are capable of spending. A budget will allow you to practice restraint on unwanted expenditures.

Explore The World Of Second-Hand: When you are in college, there are many expenditures like copies, text books, files etc. Always go for second hand for things like these. Better yet, ask your seniors for old text books that they do not require anymore. Most of them would be glad to get rid of all the unwanted books.

Dump The Change: I personally use this tip to ensure good financial health. At the end of the day when you return back to your room or dorm. You will be sure to have a few loose change on you after all the expenditures. Dump the extra change into a jar and forget about it. Do this long enough and you will find that you have just accrued a decent lump sum.

Find Cheaper Sources of Entertainment: The movie ticket prices are going through the roof, a decent lunch at a nice place can burn a big hole in your pocket. It becomes very important that you find alternative sources of entertainment that will be cheaper for you.

Find A Source of Extra Cash: It is always smart to have an extra source of income other than the pocket money from your parents. There are so many ways to generate some extra cash, especially on the internet.

Above all, money management is for effective use of money and not for getting miserly. You are in college, so make the most of this time and have a blast. You do not want any kind of regrets later that make you feel your college life was unremarkable.


5 Reasons To Start An Internet Business In College Now

This post tells you 5 reasons why you need to start an internet business while in college. If you are someone who has an entrepreneurial bent of mind then this is the post for you. This post focuses mainly on college students however, I am sure that everyone has a little to learn from this post. Famous internet entrepreneurs like Milun Tesovic started business while still 16. Currently, Milun has completed his BBA (Bachelor of Business Administration).

16-Years Old MetroLyrics Founder - Milun Tesovic (far left)
16-Years Old MetroLyrics Founder - Milun Tesovic (far left)

Time: Time is the most essential factor to succeed online. You need to have a lot of time to put in your energy and effort to startup your internet business. When you are in college you don’t have the responsibility to feed your family, nor do you have to pay the electricity bill nor worry about mortgages and such. College is a great time in everyone’s life where one can behave like an adult with the carefree nature of a child. It is up to you to make the most of this time.

Everyone Needs Pocket Money: While in college, everyone needs pocket money. It may be for buying the totally rad car or maybe even to take a girl out on a date. You can easily find suitable people in your college campus who have the specialties you require. Provide you pay them decently – you can get a lot of work done. Even then, the fees students would ask you will be much lesser than a professional would ask you for. The quality of the work will not be very different either. So its a win-win situation for you.

Cheap and Easy Availability of Resources: In a college campus you have free wi-fi, free electricity (at least for you), a laptop – these things are more than enough resources for you to give impetus into your internet business. The ease at which you can meet your requirements in college is unmatched and moreover, the resources are easily available. Moreover, in college it will be easier for you to find someone who is like-minded and may be partner you in entrepreneurship. There are clubs, groups and lot of people who may know a lot about the area you intend to initiate an internet business. Just imagine the scope for these – if you are not in college, so value the environment and make the most of it. Create an asset for yourself in those magic years.

Easy Publicity: Do you know about Mark Zuckerberg? He is the Founder of Facebook – the world’s most popular social networking site. He started this site from his dorm room – the site was a hit in his university. But eventually  the word-of-mouth is so powerful in college and universities that other universities also heard of Facebook and began to join it. Soon Mark Zuckerberg realized that he was onto something and that is how this revenue powerhouse was created. I want to emphasize here that while in college it is easier for you to get the word around about your startup. There are college notice boards, campus newsletters and a lot of other mediums where you can reach out and spread the word. And of course, do not ever underestimate the power of word-of-mouth publicity, it is the best kind of exposure you can get.

Enthusiasm: At the age that we are in college, we are more prone to taking a plunge into risks and work harder. As a startup in the internet you need to work really hard. Energy and health will definitely not be a problem for you in the youth. Moreover, you understand the value of money and it is generally seen that college students are good at boot-strapping creatively. These skills can be priceless for your internet business.

The best time to start any business not necessarily online is definitely in college. However, many fail to realize this until too late. Of course, have your fun while in college but trust me when you run your own company while still in your 20s it is a different feel altogether. Becoming a college entrepreneur is really cool and something which will earn you a lot of respect. If you are looking for a little bit of direction and inspiration, you would love to read Moonlighting on the Internet: 5 World-Class Experts Reveal Proven Ways to Make Extra Cash. It is paperback written by famous internet entrepreneur Yanik Silver.