What Tax Blunders Trigger a Tax Audit?

by manager

Every taxpayer lives in fear of receiving the dreaded news that he or she is going to be audited. While it is true that audits are sometimes performed at random and are out of the taxpayer’s control, more often than not, audits happen because of mistakes that people make when filing their taxes. The easiest way to avoid these mistakes is to work with a knowledgeable, experienced preparer. If, however, you plan to file your taxes on your own or just want to check your preparer’s work, it’s vital that you know (and avoid) the most common tax blunders that can lead to a tax audit.

Are you confident in your math skills? If not, then you could easily make a mathematical error that leads to trouble with the IRS. The professionals at the IRS are trained to find numbers that don’t add up properly and to flag those forms that contain these errors. While one or two small errors probably won’t get you audited, several errors are almost a surefire way to earn an audit. And, either way, is that a chance you really want to take? If you are not planning to work with a preparer, at least consider using software that will tackle those tough math issues for you. Even then, however, you have to be careful to put the right numbers in the right places.

Most people today type up their tax forms or fill them out online. If, however, you’re the old fashioned type and are filling out your returns with nothing more than a pen, beware! One of two things could occur if you use this method. First, if your handwriting is sloppy or otherwise illegible to the reviewer, it could get flagged. Secondly, the fact that a handwritten form is so out of the norm these days could cause the reviewer to be suspicious and flag you for auditing.

It could be that you’re an incredibly giving soul, but if you’re going to claim you made a lot of high-dollar donations or other contributions to charity, you better have the proof to back it up. While it’s not always necessary to save every single receipt for every single good deed you do, reporting big amounts with no evidence can make you look like a fraud. So, first of all, make sure you’re being honest about your giving and, secondly, always ask for documentation when you give a charitable gift.

Documentation is important for other aspects of your tax return as well. A good rule of thumb is that if you plan to file any kind of exemption, you have documentation of it. So, if you take clients out to dinner and want to write it off as a business expense or if you’re claiming exemptions for home office supplies, have those receipts handy. Being diligent and organized will help you to avoid an audit and any other tax problems. And, if you can’t find documentation, it might be in your best interest just to chalk it up to a learning experience and do without the exemption this year.


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