IRS Audit RED Flags

IRS Audit Red Flags

Some taxpayers get through the tax season every year unscathed while others undergo tax audits. An IRS audit is no less than a nightmare. Let’s just say nothing strikes fear in the heart of a taxpayer like getting selected for a tax audit. We all dread it. It can be a long process until you prove your deductions by submitting supportive documents.

To reduce your odds of getting selected for tax audits watch out for these red flags:

? Entry and Typo Errors
If your numbers fail to match the numbers the Internal Revenue System has on file, you can get into trouble, even if it is a typo error. It seems silly, but it can raise a red flag and you can receive an audit letter. Before submitting documents, go through your documents carefully to make sure there is no typing mistake.

? Earning More Than $250K Annually
High earners are on the IRS watch list. If you earn more than $250,000 per year, you have

higher chances of getting picked for audit. But don’t worry, you can get through it easily as long as you maintain your income records.

? Huge Charitable Donations
It is a good deed, but can raise eyebrows. Rules require people to complete before you file documentation of your charitable donations and gifts to non-profit organizations. The Internal Revenue Service uses correspondence audits demanding you to mail in the supporting documents backing deductions. Simply put, when making large charitable donations, make sure you report them and that they’re all are documented properly.

? Home Office Deduction
IRS scrutinizes returns on home office deduction typically because it is often abused. If you claim a home office deduction, it is most likely to raise a red flag and trigger an audit. File for a home office deduction only if you meet the requirements and have documents to support your claim.

To best thing you can do to stay on top of your tax matters and build your defense if the IRS picks you for audit and chooses to dispute your filed returns, is to manage and maintain your records throughout the year. By doing so, you can easily reduce the likelihood of errors and support your claims.

To make your audit easy, use It’s the best way to manage and track documents without any hassle.