Pampered Chef Consultants Being Audited?

[pcchefjane]

You can't claim EIC unless you have a dependent child under 18 or in college until 22. I can no longer claim EIC without dependent children. Roommates don't count.... My DD & SIL can't claim me as a dependent even though they paid a lot of my expenses last year with me being out of work 7 months except for PC...

 

[Intrepid_Chef]

Hmmmm ... the paperwork I saw said "dependent" and not "child." Last year said roomate was listed as a dependent but I didn't get EIC. My friend's sister claimed her as a dependent and got EIC but I'm thinking her income was low and that's why she qualified.

 

[chefsteph07]

My friend has a roomate who is unemployed and she considers her a live in nanny and she told me she writes her off as a dependent?

 

[Intrepid_Chef]

Last year I claimed my unemployed roomate as a dependent but was not eligable for EITC. It may have been because my income was higher last year, but I don't think so. I think without a child, you have to make less than $12,500 to get anything from EIC.

ETA: Figured it out. My friend's sister claimed her as a dependent and got EITC. She didn't understand why I could not do the same since my roomate has no income. So she directed me to a site where I figured it out. Roomie fails the "relationship test."

 

[chefsteph07]

I would like to know if anyone who is reading this has been audited for their direct sales business, or knows anyone is DS who has been.

 

[ChefBeckyD]

I would like to know if anyone who is reading this has been audited for their direct sales business, or knows anyone is DS who has been.

I would like to know this also. One of the reasons I use turbotax is that I have heard and read that Turbotax users are less likely to be audited.

If I were audited, I'd be okay - I'm not claiming stuff I shouldn't or fudging numbers - but even with that, I've heard that it is a huge headache - and I'd rather not have that stress!

 

[chefsteph07]

I use Turbo Tax as well...I have been legitimate w/ my expenses, and I've even NOT claimed things I could have...I am hoping that as long as we show a profit we may stay under the radar?

My dh says I have nothing to worry about, but still, I have been thinking about it all weekend! It makes me afraid to file now...not that I am NOT going to, but I'll be sweating when I hit that button...

 

[elizabethfox]

I was talking to some people about this yesterday and they were pretty skeptical that the IRS would be auditing 1 out of 3 people this year. They don't have enough agents to handle something like that....

 

[cwinter474]

Last year I claimed my unemployed roomate as a dependent but was not eligable for EITC. It may have been because my income was higher last year, but I don't think so. I think without a child, you have to make less than $12,500 to get anything from EIC.

ETA: Figured it out. My friend's sister claimed her as a dependent and got EITC. She didn't understand why I could not do the same since my roomate has no income. So she directed me to a site where I figured it out. Roomie fails the "relationship test."

Do you have a link to the website?

 

[Sheila]

I was talking to some people about this yesterday and they were pretty skeptical that the IRS would be auditing 1 out of 3 people this year. They don't have enough agents to handle something like that....

My thought exactly. I doubt very seriously that the IRS would be able to audit 1/3 of the nations returns this year. Maybe the poster meant that 1/3 of the Schedule C's that have Pampered Chef, Tupperware or the 3rd company listed as the source of the income would be randomly audited??? That would sound more reasonable.

- - - - -

cwinter... you can look up anything at Internal Revenue Service There are stipulations (and you must be able to show proof) on how much support you provided for the person AND the person has to pass the IRS's relationship test to qualify as a dependant. You can't claim an unemployed roommate. But if your 14 year old nephew lived with you the whole year & you provided all (or the majority of) his support as outlined by the IRS ... then you would be able to claim him as a dependant.

- - - - -

For those of you not claiming all of your deductions ... make sure that you keep the receipts/documentation! If you were to be audited, you could use the old "oh, by the way, here's some more deductions that I forgot" trump card with the auditor to get back more money.

 

[Kodeysmom]

Yeah I asked her and she did say that they told them 1/3 of everyone, but I don't see that either. I think they are are just trying to scare people. Maybe it will work and people will be more honest-who knows.

 

[dianevill]

I've always wondered if we are sometimes audited without knowing it. Do agents look over a return (thus, "audit") to see if it looks legitimate? Then if there are red flags they bring the person in? The reason I ask this is about 11 years ago, before DH and I were married, he got a letter from the IRS that said errors were found in his return, and they actually sent him a check for the difference!

 

[baychef]

I do think that they all get a quick scan, but I am just guessing!

For those of you who have a hard time with receipts, this is what I have done.

I have taken about 4 of these boxes and put each month of the year on the front of each drawer. It makes it so easy to just throw all of my receipts, etc. in them.

I then take a 3 inch binder and have purchased dividers that have each month of the year on them. I take two way tape and card stock that has been 3 hole punched and put my receipts in each month. Then I record them in P3. Each receipt and invoice it checked off as it is entered in P3 so there is nothing forgotten.

Makes my life so much easier and keeps this nightmarish task under control. Now the rest of my house is not this organized!!!

I use Turbo Tax too. For me, it saves money. I can't see paying someone to input the information I give them into a computer and charge me double of what it costs to do Turbo Tax.

I still need to master the mileage thing but there is progress!

Just stay organized and honest and don't sweat it! If they are going to find something, they will and if you are being dishonest then they will find that too! I am keeping my records for 6 years. Thought I read somewhere where "business" records must be kept for that period of time.

 

[Sheila]

Diane, if you mail your return, the IRS has to pay someone to data entry it into their computer. If they find an error, they will let you know that you are getting more/less as a refund. If they find an abundance of errors, then they will flag you for an audit. Electronic returns do not go through an individual at the IRS, they automatically go into the system. Unless you are already flagged as being suspicious or unless what was reported to the IRS does not match what you claimed (ie missing W-2's), then it's my understanding that your chances of being reviewed and/or audited are much lower.

 

[candiejayne]

Last year my BF and I were both "audited" neither of us actually had to sit down with an agent, but we had things that did not come out right. (we used the same program to do ours). His problem was because of his son being claimed by his ex's mother prior to him filing, so additional paperwork had to be filed. Mine, my electronic pin was rejected and I also had additional paperwork to file. We called the IRS on both occasions, and they refered to it as an audit. Neither of us were in trouble, but our accounts were looked into.

 

[pampered.chris]

How much do you pay for Turbo Tax? I go to an accountant and pay about $75-$90 for my tax preperation. I was just wondering if Turbo Tax is cheaper?

 

[c00p]

Turbo Tax Premier is $62.99 right now at Costco!!!! It's normally $72.99, but then you get an instant $10.00 with a coupon (that you get at their customer service desk) at the checkout. This is the cheapest we've found anywhere - and believe me, we've checked everywhere!! This is the version that you'll need to do your taxes with itemized deductions and has some small business features too.

 

[pampered.chris]

Turbo Tax Premier is $62.99 right now at Costco!!!! It's normally $72.99, but then you get an instant $10.00 with a coupon (that you get at their customer service desk) at the checkout. This is the cheapest we've found anywhere - and believe me, we've checked everywhere!! This is the version that you'll need to do your taxes with itemized deductions and has some small business features too.

I have never even seen a Costco!! Ugh!!

I did read some testimonials and am thinking I will stick with my accountant. I will spend enough time getting all my deductions together and figured out, I don't need to spend hours putting them in the computer. He does it all for me in about 45 min. The first year was slow until I started using his forms for deductions...now it is super fast!!

 

[jwpamp]

My DH is a CPA, but is in manufactuiring accounting (He is a comptroller) He does my taxes every year, as well as keeps my expenses, mileage, etc. He has it all on spread sheets, and keeps track of it all the time, so I do not need to worry about finding records if audited. BUT, I am concerned about being audited, because even though I have done this for 3 years, and I do it full time, I have yet to show a profit. I do not understand that, but that is what he says. Maybe because I spend as much as I make, and say it is a write-off???? Not sure on that one- maybe he just tells me that, to curb my spending? I told him about this thread, and he did not appear concerned, so I will just let him worry about it.

I think that it depends on how much you actually sell to show a profit....I showed a loss my first year in the biz (3 years ago) and then have shown a profit ever since. I do sell $50,000 + every year, though. If my yearly sales were less, I can see how it would be difficult to show a profit.Also, the perks definately add to the income...trips are $3500-$4500 added onto your 1099 and free samples for Directors twice a year are another $1000 added on....plus the $360 from TPC AND the cost of the ring, additional $$ that you got from recruiting incentives, etc. They are ALL ADDED IN to your 1099 as income!!!!

 

[ChefAlicia]

If Pampered Chef is considered a hobby for tax purposes you are to claim the income from the activity but can only claim expenses up to the income. So if you made $700 and you had expenses of $1000 you culd only claim $700 in expenses.

 

[Sheila]

Update: I found out that the 3rd company they are targeting this year is Avon.

 

[Intrepid_Chef]

If you go to IRS.gov then you will be able to link to several free tax preparer sites, including turbo tax.