How to avoid an IRS audit
Q.I have small home based business..using 30% of home area for business. I got 1099 from my lender that shows $10000 (rough figure) as mortgage interest! I am doing Sch A as well as Sch C and form 8829.. Could anyone tell me how do i take deduction of $10000 in these three forms.. I am using Turbo Tax for home business . the way it is doing it appears something is wrong..!! Turbo is deducting $10,000 in Sch A (that's fine!), it is deducting $3000 (30% of $10,000) in form 8829 (that is fine too!), but again it is deducting $7000 (70% of $10,000) in Sch A (is it ok?).. The next question .. is 30% business area too large to catch IRS attention for audit? I am indeed using 30%, though .. just want to avoid IRS audit. Does anyone have experience with Dr Amir Aczel tax audit theory.. does that really work?
A.$3000 goes on 8829 and ends up on C. $7000 goes on A. If the program doesn't do it correctly, override the entries. Quit being paranoid about audits. If you obey the rules and keep good recors, you have nothing to fear from an audit. You are not entering it correctly. Read the instructions for your software. Sounds to me like you need to delete the $10K from Sched A and just let the 8829 do its thing.
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