How Cage-Fighting Nuns Can Help You Beat The TaxmanArticle Category: Finance
Seriously, what tax-beating advice could a cage-fighting nun give you? Actually, more than you think.
You see, it's not all about learning how to karate chop the man from the inland revenue (although that might seem very appealing). Being the subject of a tax audit can be a painful learning experience. You need some advice on tactics from Sister 'Knuckles' Malloy!
Get Into A HabitYou probably saw that one coming, didn't you? Before you start limbering up and mentally preparing to roundhouse the tax inspector you need to inject a routine into your life. Develop a habit of tracking all your expenses. Write the details down in pen and paper or drop the data into a spreadsheet - it really doesn't matter - just turn it into a habit.
One of the first things the tax man will do when you're audited is to ask you for all the details of your finances going back as far as three years. If you've been savvy and kept your documentation up to date you'll give yourself the upper hand. If you can, try and put all data you have on a CD/DVD.
Accuracy Is Key To A KnockoutIt doesn't matter if you're going head to head with a nun carved from obsidian or the tax man, you're going to need to be accurate. Every strike needs to hit with deadly accuracy and the auditors will be watching for every lapse, ready to spring and slap on the ankle irons! That said, I don't recommend you start throwing punches left, right and centre. Instead, think about the accuracy of your paperwork.
When you're being audited, the location of the decimal point is paramount. Too many bills rounded up to the nearest 100 will look out of place. Likewise, how many journeys do you make where the mileage totals to a perfect round figure? If you're claiming 97 miles for your travel allowance then don't be tempted to round up to 'give yourself a little extra'. You may well be a master of creative uses of the compound interest calculator but, eventually, the auditor will get you!
Turn The Other Cheek...…but only once! Hey, this is cage-fighting after all. Unless you're whiter than white you're going to end up paying something to the inland revenue and it's going to feel like a slap across the cheek. Get the pain over with early and make sure you write down all of your income. Regardless of how large or small those 'extras' are you still need to report all of your income.
For some strange reason, the tax man takes a dim view of anyone who attempts to avoid paying tax. Small businesses and individuals alike have been found to have extra income that simply 'disappeared into the lycra wrestling pants'! If you get caught trying to avoid declaring income you could end up with a gaol sentence. Turn the other cheek, take the hit and move on.
Two Cage-fighting Nuns Are Better Than OneTag team cage-fighting - classic. Like the gold old days of the WWF back in the 1990's, the bouts get far more interesting when the wrestler had a partner. Sister 'Knuckles' Malloy regularly teams up with Sister 'Lightning Fists' Barker to even the odds. Take a tip from these surly sisters and, if you have a fledgling company, form your own partnership - a business partnership.
Yes, your tax returns become more complex. It also costs money to set up a business. You're also going to need a decent accountant to handle your tax affairs and this will cost you money. So, why, oh why would you want to set up a company? Because they're less likely to be audited. Nobody, bar the revenue service, knows exactly why you're less likely to be audited. It could simply be that most companies using an accountant keep more reliable records.
Toothless Taunts'I'm going to do something really horrible to you!'. 'Get ready to receive a really nasty Chinese burn.'. They're not really the sort of threats we expect to hear from Sister Malloy and her warrior sisters. Likewise, being ambiguous isn't going to help you get through an audit.
Be precise. When you write down your expenses don't be tempted to put them under a heading of "miscellaneous" or "general expenses". Nothing cries, "probe my finances until I scream" more than a generic expenses phrase that's been used to hide some money-related naughtiness by thousand of others.
Thank The LordEvery time our nuns emerge victorious from combat they offer up thanks to the Lord. Now, this might not be your kind of thing so feel free to gives thanks to whatever deity you believe in or reaffirm your faith in yourself. You are now the master of the cage-fighting, tax warriors. Sister 'Knuckles' Malloy would be proud of you.
On a more serious note, just because you've beaten the tax man this time doesn't mean you can relax. Like any competitor hungry for your crown, he will return. Be on your guard; here's a quick 5 point recap you'll need to bear in mind should a second tax audit ever arise:
- Document all of your finances. By creating a routine you'll less likely to let aspects of your finances slip through the cracks
- Have all your documentation ready. When you're being audited, you'll be asked to supply huge amounts of paperwork. Do yourself a favour and have it ready to go
- Declare all of your income. If you're caught not declaring taxable income you could be fined heavily or even go to prison.
- Set up a business. Figures show that businesses partnerships are less likely to be audited.
- Don't think you're safe. Once a tax audit has been completed, unless you're really silly, you are unlikely to be the subjected to one again but don't let your guard down. Keep up the practises listed above just in case....
Original article date: 19 Aug 2012
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Copyright © The Calculator Site