Are you risking an IRS audit as you fill out your tax return?

On Behalf of | Mar 13, 2020 | Firm News

The deadline for filing your 2019 federal income tax return will be here before you know it. Even though you may know the IRS is not auditing as many people as it used to, you still fear getting a notice in the mail that the agency wants to take a closer look at your documentation and thinks you owe more money than you do.

The truth is that you could become the subject of an IRS audit, but ordinarily, it happens because of mistakes made on your income tax return. If the agency doesn’t think it’s getting all of the money you owe, that notice could come in the mail, especially if you make certain errors that serve as red flags.

These mistakes could put you on the IRS’ radar

As you work through your federal income tax return, try not to make the following mistakes that could make the IRS believe it should take a closer look at you and your financial situation:

  • If you report that you gave a substantial amount to charity. There is nothing wrong with being generous, but if your charitable giving is well over the average of someone in your income range, it could make the IRS take notice.
  • If you do your taxes yourself, the potential for mathematical and other errors is higher, especially with all the new tax laws with which to contend. You would probably benefit greatly from working with a tax attorney who can help ensure your return is error-free.
  • If you have a hobby that generates income occasionally, don’t make the mistake of calling it a business and taking self-employment deductions. You would need to prove you made a profit from your hobby in three of the last five years in order to attempt to treat it as a business.
  • If you are self-employed, make sure you report all your income and only take deductions you can back up with documentation or other evidence. Any deductions you take should be for expenses that are essential to your ability to work.
  • If you claim the earned income tax credit, you could risk an audit. This is one of the most often abused credits, and the IRS pays close attention to anyone who takes it, evidenced by the fact that it takes longer to process these returns while the agency verifies eligibility of the filer.
  • If you make a significant amount of money or claim not to make any money at all, the IRS will probably take a closer look at your return.

Any of the above scenarios could result in an audit. If you do receive a notice of an audit from the IRS, do not ignore it. The penalties, interest and additional monies could be substantial. Instead, seek out the support of a tax attorney who can help you through the process in order to achieve the best outcome possible.