How the IRS Selects Audits

Part of the Video Series Tips for Filing Taxes

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Scared of an IRS audit? Learn the process that the IRS uses to audit taxes in this free video clip about business tax deductions.

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How the IRS Selects Audits
Hi, I'm Tom Choisnet, enrolled agent, and in this particular segment, we're going to talk about expense account. Expense accounts are for people who work for companies and turn their expenses into their employer. It's a good way to get cash to the employee in a tax preferred method. Actual automobile expenses regarding the automobile expenses may be reimbursed. Most commonly we see the government right used, which is currently at $.485 per mile. In addition to that $.485, you can reimburse parking and tolls. The accountable plans require that there is a business connection for the expenses. That they are properly substantiated, and one of the keys to accountable plans is that if the reimbursement is excessive to the actual expenses, the plan must specify that the excess be refunded. Otherwise, it's an unaccountable plan and the employer must include the entire expense account in the employee's W-2. So, if you are on an expense account, it's important that you pay attention to your W-2 because you may have an unaccountable plan and have the expense account in your W-2. So take a good, close look at that. I hope I've enlightened you a little bit about how expense accounts are managed on your taxes. Thank you!

About the Expert

Expert: Tom Choisnet has been in self-employed tax practice for over 40 years, and he has been an enrolled agent since 1968. He has prepared over 35000 tax returns. Read More