6 red flags that trigger an audit by the IRS

Posted at 5:18 AM, Mar 20, 2017
and last updated 2017-03-20 11:07:33-04

New York-based federal tax practitioner David Selig shared these red flags that would cause an audit by the IRS.

Math Mistakes

The most common error leading to an audit is simple mistakes or errors. This can mean writing the incorrect number in a blank, addition numbers incorrectly, or other simple math errors. While there may have been no intent to deceive the IRS behind honest mistakes, such errors can still to you being fined by the IRS if the errors mean you paid less income tax than you actually owed.

Liberal Use of Rounding

While it is fine to round your numbers to the nearest dollar, if you round them to the nearest hundred or even thousand, it looks suspicious. Real-world income and expenses rarely round to an even $500 or $1000. Therefore, if your return has numerous numbers, it can lead the IRS to believe the numbers are made up.

Overstating Charitable Deductions

If you give money or other items to charity, you have every right to claim the value as a deduction on your tax return when you itemize. However, the IRS has a normal amount of charitable giving they expect to see for a household that makes a certain amount of income. If your charitable deductions are too high for your income, the IRS may believe you are overstating just how generous you are.

Omitting 1099s

When you are paid for work, you generally receive a 1099 after the tax year to show the total amount you earned. If you have multiple jobs, you will receive a 1099 for each of them. Many people do not realize that the IRS is also sent a copy of each 1099. Therefore, if you fail to include one of those 1099s in your tax return, it appears to the IRS that you are trying to under report your income and therefore pay less income tax than you actually owe.

Claiming Too Many Business Deductions

It is common for people to have side businesses in addition to a normal nine-to-five job. And while side businesses can have deductible business expenses, excessive deductions can be a sign that someone is trying to take advantage of the IRS.

Obtaining Help with Your Tax Return

You can always turn to a tax professional to get help completing your tax return. A tax attorney is someone who is knowledgeable of the tax laws relevant when completing a tax return and they provide confidentiality over whatever you tell them, which is something you will not get from an accountant or a preparer you might find set up at your local big-box retailer. So if you need help with your tax return, call the phone number located at the top of this page today. A tax attorney will get in touch with you to answer all of your questions. And there is no obligation or charge with having an initial conversation. Therefore, you have every reason to make that call today and get the peace of mind at having your tax return prepared and filed correctly.