Why Am I Being Audited?

An IRS audit is something that most people hate thinking about and want absolutely nothing to do with it. However, even if you file on time and make the payments as you are supposed to, the IRS has the right to review your return and validate that what you filed is true and accurate. An audit does not imply that you will be in trouble or have to pay extra money down the road. To avoid this, it's crucial to keep in mind that the IRS has a number of red flags it might use to initiate an audit. You can lessen the likelihood of getting audited.

• Mistakes: If you file the return on your own using tax software or if you hire a tax professional, make sure you review the return. Simple errors, such as entering the wrong address or social security number, or pressing the wrong number on your keyboard, can cause a problem. This is why it's important to double-check your tax return to make sure all the information is correct.

• Deductions that are Rounded: A lot of times, clients will come and say they spent $600 on dry cleaning, $400 on gas for their house, and $200 on food. The problem here is that these numbers are not accurate. Even though you might have spent more than this, the IRS requires honest and accurate information and not guesses as to what your expenses are.

• Unrealistic Deductions: The IRS when determining whether to audit a return, uses an algorithm that looks at other similar returns. If certain deductions exceed what is normal for your industry then the IRS red flag goes up. That doesn't mean your return will automatically get audited; just make sure you are honest and accurate when it comes to the return.

• Dishonest Deductions: Flat out, making up deductions and trying to manipulate the laws to benefit yourself is always a bad idea. Be honest and accurate as to what you report on your returns for if you are ever audited this will save a lot of worry and stress.

To learn more about audits, you can visit the link IRS.gov