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Will this raise a red flag to the IRS?
Thru the company I work with we get a discount on gift cards at a home improvement store. My sister is looking to buy a kitchen thru them. I want to buy the gift cards for her, but they will be around $40,000. There is no issue with them paying me, but will it raise a red flag to the irs to have that much money charged on my credit cards, when I do not make that amount yearly after taxes?
Instead of them transferring me the money, so it doesnt look like I received more than 10k from them. They are going to pay it directly to my credit card company.
Instead of them transferring me the money, so it doesnt look like I received more than 10k from them. They are going to pay it directly to my credit card company.
To the person with the discount. Its actually a discount that we are suppose to use for friends families gifts etc. They are suppose to be gift cards purchased for others, more than even our own use. That is not an issue. It actually looks good to purchase that high of a volumn with my company.
8 Answers
- Russ BLv 69 years agoFavorite Answer
More than likely yes it will.
It is very untrue that the IRS doesn't compare what you spend to what you earn. They even compare what you own to the amount of your income.
And with the new computer system they have, they have a lot more access to information.
I don't know where you are located...but there are several states that monitor credit card charges to ensure they are collecting the "USE TAX" for out of state purchases.
There are so many ways for this to bite you, I would think twice about doing it.
Someone mentioned that you can negotiate the price for large purchases...did you know that contractors get a discount also...you can negotiate with them too.
Hope this helps.
Source(s): Enrolled Agent with 25+ years experience. - ?Lv 79 years ago
Well since you do feel that you really did have to ask for some information from this website about possible red flags to the IRS apparenty you may have heard about the SAR reports for certain actions that some taxpayers do with their financial transaction so you really should tread very lightly and be very careful and make you own decision about the way that you will end up doing this at this time in your life.
Suspicious Activity Report
GOOD LUCK.
Hope that you find the above enclosed information useful. 07/08/2012
- Anonymous9 years ago
The IRS isn't necessarily going to care.
Your company will. The discount is for you and your immediate family (meaning the people that live with you), not your sister and her household. You are not buying a gift, but acting as an intermediary to get her a discount. Eg, she gives you $40,000 and you buy $47,000 worth of gift cards.
Many firms would consider this theft and fire you. In the very least they should be adding the $7000 to your paycheck.
- ?Lv 79 years ago
The IRS does not monitor credit card purchases. They really do not care about this at all.
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- Cathi KLv 79 years ago
Most people charge more than they spend. If you paid off more than you earn it would look strange but the IRS does not get your credit card bills.
- troLv 79 years ago
first of all, if you have a $40000 limit on your credit cards, hooray!
maybe Warren Buffett does but I doubt many of the rest of us have that kind of limit
and huge purchases like this could very easily draw the attention of IRS but who knows?
- Anonymous9 years ago
Let us know how the audit turns out. And how the IRS likes their new kitchen.
- Anonymous9 years ago
no.
