Reasons for an IRS Audit
- The more of these you have, the higher your chances for an audit.Image by Flickr.com, courtesy of borman818
The IRS is more likely to audit taxpayers with six-figure salaries, according to a March 2008 story from CNNMoney.com. Your odds of receiving an audit are about 1 in 100 if you earn less than $200,000 a year. These odds rise to three percent if you're making that or more, and five percent if you're making more than $1 million annually. - Home office deductions may trigger audits.Image by Flickr.com, courtesy of Raul Gonzalo
If you run your own home office, you can increase your chances of an IRA audit by claiming too many business deductions. You should claim the deductions you're owed, but don't try to sneak in any normal household expenses. - Too many charitable donations may flag your return.Image by Flickr.com, courtesy of Christian Guthier
IRS agents take a closer look at taxpayers who claim an exorbitant amount of charitable donations on their tax forms. The CNNMoney.com story quotes a tax attorney who says that most people who send money to charities tend to donate about two percent of their income. Taxpayers who claim much more than that run the risk of triggering IRS concerns. - IRS examiners don't like round numbers. They probably won't believe that your returns on stock investments were exactly $800 or that your medical expenses came in at a perfectly round $3,000 for the year. Use exact figures for your expenses or returns to avoid arousing the suspicion of the IRS.
- Neatness matters when preparing your taxes.Image by Flickr.com, courtesy of Chris Chan
You might think that neatness only counts in school. You're wrong; if your report is filled with math errors, illegible writing and other sloppy mistakes, you'll draw the attention of the IRS. And that only boosts your chances of receiving an audit.