Audit Defense Reviews Indicate Common IRS Audit Triggers
Listen to this articleThe Internal Revenue Service (IRS) has just sent you a letter saying that you are being audited. Suddenly, your heart drops, and you break out in a sweat. “Why in the world am I being audited,” you ask yourself. Unfortunately, based on audit defense reviews, certain tax-filing mistakes can easily trigger an audit by the IRS. Here are three core triggers to watch out for going forward.
First, making a math error can spell big trouble with the IRS. So, make sure that you don’t write an “8” when you’re supposed to be writing the number “3,” for example. Yes, mistakes aren’t always avoidable, but you can reduce your chances of making them by double-checking your figures if you are preparing your own tax returns.
Second, avoid claiming an excessive number of charitable donations – and if you do give generously to charity, make sure you have the required proof of your donations in your tax records. If you lack proper documentation for proving that certain contributions are valid, it’s best to not to claim them. After all, if you claim thousands of dollars in donations on a modest salary, for example, this might cause the IRS to become suspicious of your claims.
Finally, avoid deducting an excessive number of work-related business expenses. To be able to deduct an expense for your business, it has to be necessary for your work and ordinary. For instance, if you paint for a living, you could reasonably deduct your paintbrush and paint as business expenses. However, you should avoid deducting these expenses if you own a business consulting firm and only paint as a hobby. Make sure that the expenses you deduct are truly critical to the work you regularly perform.
The possibility of undergoing a tax audit may understandably put you on edge as an entrepreneur. However, a tax expert can provide you with the guidance you need to avoid making this faux pas and thus avoid an undesired tax audit in the years ahead.
