While the risk of being audited by the IRS is fairly low, it is vital for every taxpayer to know how to identify potential audit threats. The IRS conducts audits to determine if the financial information provided is accurate and is following tax laws. An audit may also try to determine if the tax amount reported is, in fact, correct. To help you determine when you might be at risk of a tax audit, our team at Law Offices of Darrin T. Mish, P.A. has put together four warning signs that you might be at risk of an IRS audit.
#1: Your Reported a High Income
The more income you report, the more likely you are to be audited. Research shows that only one percent of all taxpayers are audited every year. However, 27% of those earning $10 million or more are audited. If you reported a high income, you are more likely to be audited by the IRS.
#2: You Claimed Too Many Deductions
Taxpayers who claim too many deductions are more likely to get audited by the IRS – especially if they are self-employed. It isn’t uncommon for small business owners to take advantage of deductions to cut down on expenses. However, getting carried away can give the IRS a red flag – causing them to take a closer look at your tax returns.
#3: You Made a Mistake in Your Tax Returns
Unfortunately, even minor mistakes in your tax return can result in a tax audit. In fact, a significant number of people are audited because of mundane math errors. If the IRS discovers that your numbers don’t match and don’t add up correctly, they will reach out to you.
Before you turn in those taxes, double-check your numbers.#4: You Make Significant Charitable Donations
Many people might be surprised to learn that a large number of charitable donations can also trigger an IRS audit. The IRS does allow taxpayers to deduct a portion of charitable contributions on federal tax returns. However, the IRS might become suspicious of a large number of charitable donations. To avoid troubles with the IRS, you should keep records of your receipts from organizations.
If you are being audited by the IRS, it is vital that you have strong legal representation. Contact Law Offices of Darrin T. Mish, P.A. today at (813) 295-7648 to schedule a consultation!