Nobody wants an IRS audit.
But the IRS is doing more audits these days to feed the shrinking federal coffers. And your chances are much greater than the average working stiff if you own your own business or you receive 1099 income, says Clark Howard, this biz blogger’s favorite consumer know-it-all.
“You have like a bullseye on your back with the IRS thinking you’re not going to report everything, or you have some side income even though you have a regular job,” Howard said recently on his Headline News network program.
So what can you do to protect yourself?
“Keep meticulous records,” Howard says. “Records are what protect you in the event you get hit with an audit.”
He says keep a separate bank account for your business and label deductions clearly. And stay clear of “miscellaneous” expenses which auditors tend to question.
If you do get audited, he says stick to the facts. If the IRS is after a lot of money from you, hire a professional to deal with them for you.
“You don’t communicate with the IRS in that kind of circumstance,” he says.
The long-awaited credit card reform law that went into effect Monday is supposed to protect credit card users and curb interest rate hikes.
But, unfortunately, the results aren’t all good. On his latest program airing on cable’s HLN network, money expert Clark Howard pointed out the good and bad with the new rules:
Super Good news: Credit card companies can no longer raise interest rates on an existing balance. They can no longer entice you with a low interest rate, then raise it once you’re a card holder and have built up a balance.
Bad news: They can, however, raise rates on future purchases.
Good news: Instead of a 15-day notice on rate changes, they must give you 45-days notice.
Good news: In the past, some companies were guilty of two-cycle billing, raising rates well above what was stated in the credit card agreement. They can’t do that anymore.
Major warning: Watch out for new fees credit card companies may impose to recoup lost revenues from the changes. Look for annual fees, inactivity fees and processing fees. Be alert for the notices credit card companies must send out to tell you about new fees. Interest rates on many new accounts also are higher.
Tip: Clark recommends using your card at least twice a year to avoid fees on inactive accounts.