Just hearing about an IRS tax audit sounds stressful and overwhelming, but going through one can be extremely taxing and time-consuming, even if the IRS decides not to pursue additional action. Though these audits can be random, there are some actions and oversights that can trigger an audit. Ask yourself the following questions to determine if you may be at risk.
Are You Failing to Report Income?
Each year, you receive a W-9 and 1099 form from your employers for the work that you performed throughout the year so that you know how much you need to claim on your tax return. Well, guess what? The IRS receives copies of those same earning statements, as well as others that need to be claimed. Therefore, if you misrepresent the amount of income that is found on these forms or fail to report income altogether, there is a chance that your tax return will be flagged for review.
Are You a High Earner?
Generally, the chances of going under review are impacted by the level of income that you make. Individuals who earn more than $200,000 are audited about two percent of the time, those who earn more than $1 million are typically audited six percent of the time. So, the more money you make each year, the higher the risk of you being audited.
Do You Take Significant Business Deductions Each Year?
While you are allowed to take business expense deductions each year by United States tax law, it is important that you understand doing so will attract the attention of an IRS auditor. If you claim an excessive amount of miles on your vehicle, deduct a significant percentage of your home expenses as a home office, and/or take large deductions for meals and travel, you must ensure that you have the appropriate documentation to back up these expenditures in the event an audit occurs.
Do You Take Excessive Deductions for Charitable Donations?
It has been proven that making charitable donations is an effective and legal way to reduce your tax debt, but significant donations to charity will need to be properly documented. If you are unable to locate your receipts for previous donations, contact the organization to which you previously donated and request copies prior to filing your tax return.
In the event that your tax return triggers an IRS audit, get in touch with a tax attorney in your area immediately for help navigating the audit process. However, if you would like to avoid the audit process altogether, a tax attorney can help you avoid triggering the audit to begin with by helping you with the preparation of your return.Share