Reasons why audited

Opting to handle the financial side of a business on your own is often a recipe for disaster— numbers are best left to the professionals. Discrepancies can arise in any number of ways throughout the course of your return. In many cases, these discrepancies come down to simple human error. This is another reason why having a specialized professional carry out your bookkeeping is such a good idea. An accountant or other professional is still at risk of making human errors just like everybody else, but the risk of making huge mistakes or overlooking certain things entirely is significantly reduced.

Other, clearer discrepancies can also cause problems and may appear more nefarious. Overstated deductions, incorrect filing statuses, mix-ups with dependents, and a number of other issues are all fair cause for audit in the eyes of the IRS. Telltale signs like a lack of information, mismatched facts, and lazy math are all easy triggers for audits. You must be logged in to post a comment. Regardless of your location we can help. The IRS may begin to wonder how your business is staying afloat.

IRS Publication has details. Along the same lines as reporting too many losses is reporting too many expenses. To be eligible for a deduction, purchases must be 1 ordinary and 2 necessary to your business. A professional artist could probably claim paint and paintbrushes because such items meet both requirements. The questions to ask are: Was the purchase common and accepted in the trade or business?

Was it helpful and appropriate for the trade or business? Home office deductions are rife with fraud. Claiming a home office deduction may be more defensible if you have set off a section of your home strictly for business purposes. Be honest when you report expenses and measurements. When making your calculations, be precise and avoid making estimations. Round to the nearest dollar, not the nearest hundred. We've weighed the pros and cons of some major players in the space.

Phone, email, mail and online portal. Refunds possible but somewhat limited. Refunds only within 15 days of enrollment. Some case managers are also enrolled agents or CPAs.

Phone, email, mail and chat through online portal. Ramona Paden contributed to this article. Why the IRS audits people.

Making math errors. Failing to report some income. Make sure that you are being honest about the value, and that your donations are not a significant percent of your income. If you do make a larger than normal donation, be sure to save your receipts and submit them with your return. While taking credits and deductions are not immediate red flags for the IRS, the Earned Income Tax Credit and home office deduction are associated with a lot of fraud.

If you are taking these credits, make sure you are eligible and that you are taking them correctly. This article was last edited on September 7, Not reporting all income If you choose not to report all of your earnings, it is highly likely that you will be audited.

Making a mathematical error or other mistakes Errors happen to the best of us. Filing with the wrong status Claiming the correct filing status is important. Deducting too many business expenses or business losses If you have your own business, make sure that any expenses you claim are real and that you have receipts or other proof to back them up in case of an audit.

Using round numbers If your income or deductions are not even numbers, do not round up. Making a large donation to charity Donating to charity is a great way to reduce your taxable income while helping out a cause you are passionate about. Share article:. Get started today to get your maximum refund.