IRS Audit Flags

Root canals and IRS audits are 2 things that can make you wince. You will be able to avoid a root canal if you look after your teeth. Similarly, if you look after your financial health and avoid certain practices, you may be able to steer clear of an IRS audit. The IRS may have to audit you if many red flags come up.

In an audit, the accuracy of your tax returns is decided by the IRS. Certain deductions must be proven.

You may be shocked by these IRS audit flags:

* Believe it or not, claiming too much in charitable donations may be a flag to IRS auditors. You’re likely to be flagged for an audit if you declare $2000 when the average is $500. You have to be able to prove the entire amount by saving your receipts.
* Too much deductions for those who are self-employed. The IRS is very careful to watch out for these types of deductions.
* People who make over $100,000 are scrutinized more closely.
* Inconsistencies between this year’s return and last year’s. Inconsistencies are going to be noticed, even easy ones like name changes.
* Considerable changes in income. For example, the IRS will target you for an audit if you only made $20,000 this year when you earned $20,000 last year. Of course, there are several reasons why your income could have changed so much. Proving it is required.
* Incomplete tax returns are a flag for the IRS, too. If an IRS employee has to interpret your tax return because of incomplete answers or illegible handwriting, they’re more prone to flag you for an audit.
* Inconsistencies between state and federal returns.

You can avoid an IRS audit by filing your tax returns truthfully. Documentation have to be kept for at least three years. To steer clear of further issues, follow these tips:

* Know that you can settle in installments, do the audit by mail without meeting the IRS, refute its accuracy, and other rights.
* Be prepared to present receipts by gathering documentation.
* Consult a professional if you think the issue too complex.
* You have nothing to fear if it is an honest mistake.
* Unnecessary information shouldn’t be provided.
* You’re not being accused of anything, so don’t panic because they’re just checking accuracy.

Keep your IRS issue from becoming a nightmare. Avoid audits, and if you happen to be selected for one, stay calm. An attorney can assist you.

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