IRS Audit Flags

Root canals and IRS audits are two things that can make you cringe. You'll be able to avoid a root canal if you look after your teeth. Similarly, you'll be able to steer clear of an IRS audit by avoiding certain practices and take care of your financial well-being. The IRS may have to audit you if several red flags appear.

In an audit, the accuracy of your tax returns is determined by the IRS. Certain deductions need to 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 list $2000 when the standard is $500. You should save your receipts and be able to prove all $2000.
* Those who are self-employed may be flagged for too much deductions. The IRS carefully looks for these deductions.
* People who earn over $100,000 are scrutinized more carefully.
* Inconsistencies between this year's return and last year's. Inconsistencies are going to be noticed, even simple ones such as name changes.
* Your income considerably changes. For instance, the IRS will target you for an audit if you just made $20,000 this year when you earned $20,000 last year. Your income may have changed for several reasons. Proving it is necessary.
* The IRS flags incomplete tax returns. You're prone to be audited if your returns have incomplete or illegible answers.
* Inconsistencies between state and federal returns.

You can steer clear of an IRS audit by filing your tax returns accurately. Documentation need to be kept for at least three years. Follow the following tips to steer clear of further issues:

* Do not panic. It isn't an accusation of wrongdoing. It is a review for accuracy.
* Being aware of the audit procedure is vital. For example, know that you have the right to conduct your audit via the mail, you're not forced to meet with the IRS, you're able to question the accuracy of the audit, and you have the right to pay your dues in installments.
* Save documentation to support your claims. Show receipts if you deducted for tools and clothes needed at work.
* If you feel the problems regarding your audit are too complicated, talk to a professional to assist you with your IRS problem.
* Only discuss details about the IRS problem being audited. Your employees should not discuss other matters if your business is being audited.
* People who willingly cheat the system are the ones who normally get penalties. If you made an honest error, chances are the IRS will be forgiving.

Keep calm if you are ever flagged for an audit. Get assistance from a tax attorney.