What To Do If…You’re Audited (and things I learned along the way) Part 1

by Pollyanna Proffie

TL:DR? Perhaps many of us on contracts who do the lion’s share of adjunctical work can deduct expenses on Schedule A.

I was audited this year. Just two weeks before I filed 2014 taxes. In audit land, you are notified about six weeks before your audit appointment. Good thing that my shoebox system is pretty comprehensive. Prep involved pulling things out of it and taping them to 8 1/2 by 11 sheets, then putting them in folders, and silently saying to myself “what-evs” so as to be the change I seek in the world: NO WORRIES. This did not really work. I have not sweated so much along with sinking-jumping tummy since forever.

Long story short: No more Schedule C deductions[1] for me because my small consulting practice of technical writing primarily for government agencies pretty much dried up starting in 2008 (economic downturn, Sequester, and, well, general defunding of Science). And I owe a bit on the last year of consulting because you need to earn a percent of your income in order to even use this deduction schedule. I turned out to be about $475 short. So, I owe a fair amount and am paying now on a plan. And, yes, I decided not to bill a federal agency for some work in 2014 because, well, that amount will not get me into the sweet zone. So: more work for free.

Auditors comb through your life using a careful script. Auditors are rather focused on the script and actually quite neutral in tone. I found this neutrality somewhat calming but also unnerving. A number of questions about my working conditions and possible sources of other funds went on and on and on. I know this is typical. Yet, as these questions wound down, with some that sounded like off-script questions, I suddenly offered:

“Are you wondering why a professor makes so little money? You have my W-2 forms. And we have discussed my dwindling consulting practice and my associated expenses quite closely.”

Translation: Are you wondering how I live on this money? What MUST I be hiding, because I am a freaking ENGLISH PROFESSOR.

Very carefully, I explained our working conditions that are pretty much typical across the country. I live in a major East Coast city and teach at a huge R1 land grant university. My auditor’s computer screen was not turned to me, but I think she may have checked a February 2015 Wall Street Journal article I referred her to, as well as a Washington Post first-person piece by an adjunct.

The verdict on my audit was mixed: my consulting on Schedule C largely survived the audit. In other words, I am not a tax cheat. And I did the deductions correctly. Yay, TurboTax and the one year circa 2005 I paid an accountant for filing. I modeled my forms after his guidance for years. Bad news? I owe in part, but not because I cheated or was stupid. But the worst thing: No more Schedule C deductions. Why? No more consultancy money to help cover my food, rent, and as-sundries of life.

My razor-thin life is now under water. I try to be calm.

I quickly cajoled my auditor into talking to me a bit about shifting to a Schedule A system. I think she entered into this side topic willingly because she could see that without Schedule C deductions for a percentage of cell phone use, home internet access, one professional association dues, three technical journal subscriptions, and the teeny tiny square footage deduction for my desk and chair, much less money to live on.

Her first caution was “I do not think you can use Schedule A. That is for unreimbursed work expenses. Your W-2 from (Think Huge U) means that you are likely not eligible for these deductions.”

We spent time looking at my contract, my hours on campus for teaching and office hours; she was really surprised to find out that most of my work in grading and responding to student work was done at home, by email (on my laptop or ancient desktop or smartphone). My aging smartphone came in handy in two ways:

  1. I texted a colleague who took photos of our little office squat from several views. These photos helped convince her that there really were twelve people who cycled in and out of the four desk-set up with only one computer and a landline desk phone that we never had the codes to install a working voice mail box. My desk spouse looked pretty scruffy in a absent-minded professor way in one of the selfies, so thanks, D, for that nice touch. (#IRSselfies, sorta? Whoa, these are a thing!)
  2. On the same smartphone, I opened my email to one of my student folders; the sound of “you’ve got mail” dinged, dinged, dinged. Yay for real-time emails from students to make the case that we work everywhere 24/7! I showed her a couple of the long strings of student queries, many date stamped at 10 PM or my responses at 4:50 AM. And, get this: because I do not clean out my gmail inbox very often, when I sorted more than five years of student emails, that number in my inbox is 20,592.

Stay tuned for details of my second audit session, in which I continue to shamelessly probe my auditor’s willingness to guide me in a bold and yet modest proposal: that I deduct on Schedule A for 2014. Yes, I will need to refile an amended form in October. Also, I can tell you about the response of a “home business auditor specialist” to me when looking at my “financial innards.”

Hey, I survived one audit. I can endure another, right? Because PrecariCorps? (waving!) Anyone want to join me in my IRS probe, wherein I probe them because they probed me?


[1]Warning: IRS document of complexity; read about Sole Proprietorships in this Dummy’s Guide for clarity.

Pollyanna Proffie is a Huge U Comp Instructor (will a hyphen help? I believe it will: Retyping Huge-U Comp Instructor, there, fixed that)YES–THAT HYPHEN IS GOOD  making payments to the EYE R ESS for another six months….with interest (boo) but no penalty (yay!)….can we get a pro bono accountant in the comment string? That would be fab. I will pay in tears of relief. Thanks NFM for the talk-type therapy moment on this blog. And, LK, my upstart kitty lady buddy.

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