April 4, 2010

Marcum LLP Partner Carolyn Mazzenga comments on items that can trigger an audit

By Michael H. Samuels

Featured Carolyn Mazzenga, Office Managing Partner, Melville, NY

Marcum LLP Partner Carolyn Mazzenga comments on items that can trigger an audit


The Internal Revenue Service says about one out of every four taxpayers file their taxes in the last two weeks leading up to the April 15 deadline.

If you fall into that category – because of a busy schedule or a penchant for living on the edge – be sure to get familiar with this year’s tax changes, even enhancements, that could help fatten your return check or lighten your payment load.

Also take special care with factors that can serve as red flags for an IRS audit.

Do you qualify for these deductions?

New Wheels

Those at a certain income level who bought a new car, light truck or motorcycle after Feb. 16 of last year, but before Jan. 1, 2010, can deduct state and local sales taxes on vehicles on up to $49,500 of the purchase price. That’s in addition to deducting state and local income taxes, said Arnie Haskell, tax partner, Holtz Rubenstein Reminick Llp, Melville.

First Home

If you bought a first home, you may qualify for a tax credit up to $8,000. If you didn’t make the year-end deadline and have a binding contract by April 30, you can still take the tax credit on next year’s return if you close by June 30.


Haiti Relief

In most cases, charitable donations have to have been made in 2009 – but not so with money sent to qualified Haiti earthquake relief programs, as long as you contributed on or before Feb. 28. As with any charitable donation of more than $250, you’ll need a receipt as well as confirmation from the charity. Those who texted donations can use their phone bills as receipts.

Earned Income Tax Credit

Low- to moderate-income workers may be eligible for a credit of up to $5,657, based on income and family size. Up to 25 percent who qualify, according to the IRS, don’t claim this credit.


Unemployment Benefits

If you received unemployment insurance benefits last year, you can exclude up to $2,400 of the amount from your gross income – that goes equally for a spouse.


Think of the American Opportunity Credit as an expansion of the Hope higher education credit – increasing eligibility, the credit amount to as much as $2,500, as well as the number of school years covered.

Energy Efficiency

Taxpayers can get a credit of 30 percent of the cost of qualifying energy-efficient home enhancements – that’s up to a max of $1,500 for improvements like insulation and windows. Just be sure your improvement qualifies.


For more details and eligibility requirements on other deductions go to irs.gov

5 things that can trigger an audit

Home office deduction

Just because you take work home doesn’t mean you qualify for such a deduction. If you run a business from home, you’ll need to become well-versed in IRS criteria, said Carolyn Mazzenga, tax partner, Marcum LLP, Melville. Such criteria can include using part of your home exclusively to meet with clients.

Business start-up expenses

People looking to start their own businesses may want to deduct start-up expenses, but they may not be “necessarily currently deductible,” said Mazzenga, if you’re not yet generating income. The IRS will be looking carefully, too, at hobby expense versus a real business.

Foreign bank accounts

In the wake of its voluntary amnesty program last year that got thousands of taxpayers to come forth and declare overseas holdings, the IRS is expected to continue its crackdown on foreign transactions.

First-time homebuyer credit

The IRS clearly had concerns about abuse with this credit, hence the requirement that filers include closing statements with their returns, Haskell said.

Income over $1 million

Last year’s IRS enforcement figures show that 6.4 percent of individuals reporting $1 million or more in income got tagged for an audit. That was the case for fewer than 1 percent of those reporting less than $200,000.

Do you believe the recession is over?

“I don’t think the recession is over yet. We’ve got to get consumer spending back. I see clear indications that we’ve bottomed out.”

As struggling clients sought fee reductions, revenue slowed and the firm reduced its payroll by about 15 percent, he says. The portion of the business that handled mergers and acquisitions and initial public offerings “dried up for about a year, from about June of ’08 to June of ’09. We’re starting to see that come back. Slowly – but it’s coming back.”

How did you get involved with film?

“Robert Ludlum, who was a bestselling writer, was a client of mine.” Weiner became executor of his estate. “When he died was right before the first Bourne movie came out – ‘The Bourne Identity,’ which became a tremendous success.”

What would you change about Long Island?

“Taxes. And I’d probably change the weather between January and March if I could.”


Carolyn  Mazzenga

Carolyn Mazzenga

Office Managing Partner

  • Tax & Business
  • Melville, NY