What Could Trigger an IRS Audit?

Posted on: 27 February 2023

It's every taxpayer's worst nightmare — the dreaded IRS audit. Nobody wants to hear that they owe the government more money, so it's important to make sure you do everything right when filing your taxes.

But what could trigger an audit? Take a look at three red flags that could trigger an IRS audit.

Reporting Too Much Income

This one might seem like a no-brainer, but reporting too much income is one of the key things that could trigger an IRS audit. The IRS will be suspicious if you have reported large amounts of income that are out of line with what other people in your same tax bracket are reporting.

In some cases, the IRS will even compare your income to other taxpayers in the same sector or industry. If you're reporting significantly more than they are, it could be a sign that something isn't right.

To avoid this, make sure you report only the income you have earned and double-check your calculations. Hire a CPA tax service to help you with your taxes if you're unsure about anything.

Claiming Too Many Deductions or Credits

The IRS wants taxpayers to take advantage of all the deductions and credits they are eligible for, but claiming too many can also be a red flag. The IRS may audit you if it looks like you're claiming too many deductions or credits that don't seem to add up.

For example, if you claim a home office deduction, but it looks like the space isn't used exclusively for business purposes, the IRS may flag this as a potential sign of fraud. In addition, claiming more charitable donations than normal or deducting more business expenses than usual can both draw extra scrutiny from the IRS.

Again, make sure you only claim what is reasonable based on your situation and back up your claims with receipts and records if possible. You need to keep a good record of every business-related expense you deduct and any charitable donations you make. This will help you prove your case if you are audited.

Filing Errors

Finally, filing errors could also trigger an IRS audit. If your return contains mistakes or inconsistencies, the IRS may assume that you are deliberately trying to hide something.

Therefore, it's essential to double-check everything before you submit your return. Ensure all the information is correct, including your Social Security number, address, and other personal details.

It's also important to note that if you file late or don't pay your taxes on time, the IRS could assume you are trying to avoid paying what is owed and may launch an audit. You want to avoid this if possible, so make sure you file your taxes on time.

Nobody wants to deal with an unexpected IRS audit — especially during tax season! To help avoid this unpleasant experience, keep these three potential triggers in mind and make sure that all of your information is accurate and up-to-date before submitting it to the government. With these steps, hopefully, you won't have any surprises come tax time.


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