Just in the nick of time… Last night I ran across an article that details five supposed red flags for triggering an IRS audit. The truth is, the formula for identifying which returns to audit remains a mystery, so it’s hard to say what the most important factors really are. But it’s still worth a glance, especially with April 15th drawing ever closer…
Here they are:
1. Overkill on charitable contributions — Donations that are disproportionate to your income might raise eyebrows.
2. Too many deductions for the self-employed — Keep your work-related write-offs in check, as the IRS will compare your deductions to the size of your business to ensure that things aren’t out of whack.
3. Above-average deductions — Here again, the IRS will be suspicious of unexpectedly high deductions, this time in relation to your income.
4. Making six figures — The IRS apparently views such individuals as lucrative targets, and they’ve even gone on record in stating that audit coverage in this category is “still too low” despite the fact the number doubled from 2001 to 2005.
5. Careless omissions — To avoid problems, the article recommends filing electronically. That’s funny, because I read just the exact opposite in a recent article over at MyMoneyBlog.