Today’s world is digital. Everywhere you go now, that person/entity wants you to set up an account online. It is annoying but in many cases, it is necessary and the best way to work with that entity. One of those entities is the Internal Revenue Service (IRS). The IRS is moving to a more digital platform. With the reduction of employees, digital will allow a person to make direct payment of any balance due, see payment history and respond to any notices without waiting on the phone for multiple minutes or hours to talk to someone, who may or may not be fully trained to handle your issue. Issues can be resolved quicker, with less stress. You can set up an individual account with the IRS which will allow you to see the information that the IRS has on you, allows you to make payments, see payment history, create payment plans, request account transcripts, and authorize tax professionals to work with the IRS on your behalf. To learn more about this account, go to Online account for individuals | Internal Revenue Service. You also work with the website ID Me. This site verifies your identity with the government. This is a very important issue (identity) that you must do to set up your IRS account. Not only is this account used by the IRS, it used by the Social Security Administration (SSA) so if you register with SSA you can use an existing ID ME account. We are encouraging all of our clients to set up an account with IRS. This will allow us to request online power of attorney authorization from the client when we have to work with the IRS on the client’s behalf. For those clients with business accounts, you can also set up a business account with the IRS. To learn more about this account go to Business tax account | Internal Revenue Service. Again, we are highly encouraging our business clients to set up one of these accounts. To be better prepared to deal with possible future problems and see what your current status is with IRS and SSA, you need to set up these accounts and share them with us.

Recently I came across a professional article about an old subject. Proper documentation. It was just a good reminder of a basic requirement for claiming deductions and expenses for returns. First off, the burden of proof for all deductions and expenses falls on the taxpayer. It is not the IRS job to disprove any deductions and expenses claimed, initially. Once the taxpayer submits proper documentation or evidence for a deduction/expense, then it becomes the IRS’s responsibility to disprove it. When providing proof of documentation, it must be organized such that one can know that it is the related deduction/expense. A tax court case in 2024 involved the taxpayer’s providing photocopies of bills, receipts and handwritten notes, as a group, along with a spreadsheet for one group of the expenses claiming they represented the deductions/expenses on his return. The copies were not grouped by the deductions/expenses or totaled to show the amount claimed. The court called it “the Shoebox Method”. For those of you too young to know what this is, us, old timers, use to see clients bring in a shoebox full of paid bills/receipts in a shoebox and give it to us to process. For some we call it the dashboard method because all the receipts are kept on the dashboard of the taxpayer’s truck until needed. The spreadsheet itself was brought into question as it contained in its listing transactions that no documentation could be found on. Also, transactions were doubled from the original receipt and the credit card receipt. After that, individual transactions were questioned when it appeared that no clients/customers were involved in the meetings. So, the spreadsheet was not credible. So, to summarize, when you want to claim a deduction or expense then you must have a document that supports the claim and then those related documents must be grouped together and totaled to properly substantiate the claim.