Will Your Tax Return Draw the IRS’s Attention?

No one wants to experience a tax audit. The good news is that most people never will have to go through that experience. The IRS simply doesn’t have the time and resources to audit every tax return. In fact, the IRS only audits about 1 percent of all returns. That means most people don’t have to worry about being audited. However, if you want to be extra careful and decrease your odds off being chosen even more, there are some tips to keep in mind when you file your tax return.
There are some red flags that could increase your chances of catching the IRS’s all-searching eye. Here are a few of them:
- You make a lot of money
- Your deductions are higher than normal
- Your charitable deductions are high
- You don’t report all taxable income
- You own or run a small business
- You claim the alimony deduction
- You claim a loss for a hobby
- You claim rental loss
- You deduct a lot of business expenses: travel, entertainment and meals
- You don’t report a foreign business account
- You cash out some of your 401k or IRA early
- You claim large gambling losses or don’t report big winnings
These are some of the most common ways to get the IRS’s attention, but if you avoid these kinds of things you might reduce your chance of an audit.
However, there is no full-proof way to avoid an audit, but keep this in mind: as long as you are being honest on your taxes you don’t have anything to worry about. Even if you are selected for an audit you will come out unscathed if you have nothing to hide. Another thing that can help is to contact a professional tax preparer to do your taxes for you. This will decrease errors and your chances of being selected for an audit. Contact GROCO if you need help with your taxes. Call 1-877-CPA-2006, or click here.
Mechanics Bank CEO | Steve Buster
Episode Transcript of: Mechanics Bank CEO | Steve Buster Alan Welcome back. I’m here today with Steve Buster. Steve is an accomplished executive here in Silicon Valley where he spent several years as a CEO of a regional bank, and then went over to a life science company. And I’d like to talk about…
Performance Management | Justin Hyde
Episode Transcript of: Performance Management | Justin Hyde Alan Welcome back. I’m here today with Justin Hyde. He’s a founding partner at the Hyde Norton group, a company focused on performance management. Justin, welcome to today’s show. Justin Thanks, Alan, I appreciate you having me out. Alan So Justin, can you give me some background…
Money Habits | Megan Lathrop
Episode Transcript of: Money Habits | Megan Lathrop Alan Welcome back. We’re here today with Megan Lathrop. She’s a money coach, certified financial planner, and also an author. Megan, welcome in today’s show. Thank you. So thinking, give us some of your background. How did you get to where you are today? Megan Sure,…
Succession Planning | Cameron Carlson
Episode Transcript of: Succession Planning | Cameron Carlson Alan Welcome back. We have with us today, Cam Carlson. He is the president of Carlson Hammann, a consulting firm specializing in succession planning and exit strategies. Ken, welcome to today’s show. Cameron Thank you, Alan. It’s good to be here. Alan So give me some background…