Tax day has once again come and gone. Many Connecticut residents were able to get their returns and -- if applicable -- payments submitted on time. Then there are those who may have needed to file extensions so that they have more time to figure things out. No matter what side of the fence one finds him or herself, those who did or do any of the following things may face tax audits in the future.
The word audit is one that just about everyone -- IRS agents excluded -- hate to hear. However, audits are done to keep people accountable and collect more money for the government. The Internal Revenue Service takes its role in tax audits very seriously and is constantly on the lookout for people who are trying to cheat the system.
Sometimes mistakes are made that are unintentional. When it comes to audit time, the government won't care if issues on tax returns were unintentional or not. They just want any money owed them. There are several red flags that will cause the IRS to issue an audit request. Seven of the most common are:
- Rounding numbers up rather than being precise
- Not reporting all income
- Math errors
- Taking the home office deduction without having a real home office
- Trying to deduct ineligible work expenses
- Reporting false charitable donations
- Utilizing a Schedule C to report losses and hide income
Tax audits happen. There are times when this type of event will result in one having to pay more in taxes, penalties and fees. There are even those who may find themselves facing criminal consequences. Of course, there are those for whom the audit will not change a thing. Connecticut residents who find themselves facing tax audits can get through the process as quickly as possible with a little legal help in their corner.
Source: nerdwallet.com, "7 Reasons the IRS Will Audit You", Ramona Paden, Accessed on April 18, 2018