By: Seomul Evans
Submitted: 2010-01-28 03:49:44 | Word Count: 509
You are likely to get an IRS audit because of Large Amounts of Itemized Tax Deductions, Unreported Taxable Income, Unreported alimony, High DIF, Self Employment, Automobile Logs, Home Office Tax Deductions.
An IRS audit is always a result of a series of wrong acts by a taxpayer, and it is always good to know the things that may be a red flag in the eyes of the IRS. Whenever you file your tax return, it gets processed by computerized systems, and a flag is raised against a particular record, if it does not fall within the average value of the statistical data during that year.
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Once a particular entry is flagged, it gets rechecked by an IRS employee and if there is any abnormality discovered after human rechecking a notice may be sent to the taxpayer. On certain occasions, the audit flags are a direct ticket to one hell of an IRS audit.
The audit flags may be raised on account of several factors. First up, if your calculations are too sloppy, and you have messed up your entire mathematical calculations. You can avoid such mistakes by electronically filing your tax returns.
Secondly, some of the folks believe that they can save some of their additional revenues from being taxed. But, this is again another misconception, because if anybody issues a W 2/1099 is bound to pass on a copy to the IRS, informing them about your additional source of income. As a result, if you do not indicate this extra source of income, you may have to face an IRS audit straightaway.
If you want to save taxes, you need to minimize your net taxable income via legal means, not by lying to the IRS and filing wrong tax returns. More so, if there are too many irregularities in your income levels, you may be up for an IRS audit pretty soon.
Another common IRS flag is presence of too many rounded off records in your earnings. Everyone knows that the transactions usually involve decimal points and $1000 entry repeated multiple times in your records, is more than enough to raise an IRS audit flag against your name.
Those who earn $100,000 or more, on an annual basis are of course more prone to get audited by IRS (but you cannot do much about it, can you?). You may also be calling for trouble if you do business transactions, which are not reasonable enough. For instance purchasing or selling property for rates that are too high or too low in comparison to the standard rates.
There are numerous things that may force an IRS audit flag to be raised against you, but the abovementioned ones are the most common flags that may trigger an IRS audit against you.
So, try to avoid these mistakes to prevent an IRS flag to be raised against your name. If you think your records and calculations may invite trouble, you may consider seeking legal help from a tax attorney, CPA or a tax preparer, who may guide you properly and save you from IRS problems.
