Red flags that can trigger an IRS audit - AmericaNowNews.com

Red flags that can trigger an IRS audit

  • Red flags that can trigger an IRS auditMore>>

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The IRS does audit taxes randomly, but not many. Money Expert Nathan Bachrach says most audits happen because taxpayers' returns include one or more red flags. 

At the top of the list - failing to include income, or a Form 1099. If you're self-employed, the IRS is going to be looking at your return very, very carefully. Neglecting to provide income accounts that match the 1099's delivered to the IRS is a big no-no.

Also a red flag - pumping up the home office deductions. If you work at home, you're entitled to some deductions. But be very careful here in what you claim - you can't claim your entire power bill or phone bill, for instance, if you happen to live there, too.

Another biggie - citing too many losses on a Schedule C. If you report losses year after year, the IRS is going to wonder how you're staying afloat.

Something else that can trigger an audit - reporting a higher-than-average amount of charitable giving. Taxpayers who claim those deductions usually are giving away about 3 percent of their annual income. If you're giving a lot more than that, make sure you have all of your receipts.

According to Bachrach, something else that may trip an audit is too many round numbers. If you're reporting income or losses that look like guesses, the IRS may ask to see the paperwork.

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