Q What are some scams taxpayers should watch out for?
A “The worst scam out there is the home-based business, particularly tricky because there are many legitimate home-based businesses,” said Gene Utterback, member of the Maryland Society of Accountants and a certified IRS enrolled agent.
Utterback said some small companies market themselves as home-based businesses, but entice people to use personal contacts to sell whatever product line they have.
But some taxpayers can run into trouble because of restrictionson home office deductions. “So when you host a party in your living room, you get no deduction because before and after the party you use the living room for living,” he said.
You may need to register with the state, file a different return or be subject to self-employment tax.
“Home-based businesses should not be entered into lightly and certainly should not be considered without first consulting with a tax professional who can advise you on the implications,” Utterback said.
