Tax Deductions That Scream “Audit Me!”
An IRS audit is one of the most dreaded (and even feared) parts of the annual tax return process. No one wants the IRS to come looking for verification of the data on your return from years past…but what if there IS a mistake on your return? And, even if your return is entirely mistake free, the audit process elicits significant stress and worry, and it takes up lots of your precious time.
You may wonder if there are aspects of your return that actually may call attention to your annual return and increase your audit risk.
Here are some common issues to watch out for on your tax return that may actually prove to be red flags for the IRS:
The IRS notices arithmetic errors. In fact, basic math errors are one of the leading reasons that taxpayers are audited. An arithmetic error may make the IRS think that you are purposefully trying to include incorrect information. So, it is wise to check your arithmetic before you submit your return to minimize the likelihood that you are audited. If you do get an inquiry from the IRS and have simply made a math error, correct the issue and respond to the IRS quickly so you can avoid an extensive inquiry.
In addition to math errors, another big red flag for the IRS is inconsistent information. Specifically, you should make sure that your reported income matches your W-2s or 1099s and that you do not have discrepancies between the information you receive from your employers, banks, etc. and your tax return.
Those who receive the majority of their income in cash are targets of IRS audits because it is much easier for these individuals to under-report income. If you receive much of your income each year in cash, just be aware that you have a bit of a target on your back, so keep accurate and detailed records.
With the recent popularity of social media for communicating, the IRS has begun to watch these online venues for individuals who are claiming to pull one over on the IRS or cut corners on their taxes. So mentioning your tax strategies online may not be the best idea.
Ineffective Tax Support
Did you know that your audit risk can increase if you are connected with a tax firm or preparer that the IRS has identified as high risk?
How to Protect Yourself from an IRS Audit
On the other hand, having a reputable, professional tax firm review and advise you each tax year can save you money while also decreasing your audit risk. Success Tax Relief, for example, has over 30 years of experience working with individuals on tax returns and supporting individuals who have been audited. Success Tax Relief can work directly with the IRS if needed and generally knows what the IRS is looking for, how to avoid an audit, and how best to respond in the event of an IRS inquiry. If you are particularly concerned about an elevated audit risk, give Success Tax Relief a call and let us review your return and your documentation before you submit it to the IRS. Give yourself some peace of mind and contact us today!