If you are ever audited by the IRS, it doesn’t mean you did something wrong. Sometimes all you need to do is explain your situation, or fix a math error. But if you’re worried about being audited, make sure to avoid these pitfalls.
1. Not reporting all income
If you choose not to report all of your earnings, it is highly likely that you will be audited. If you are a 1099 worker but you did not receive all of your 1099s, you are still responsible to report the income yourself.
Your company or client(s) will be required to send the IRS a record of anything they paid you during the year. If you don’t report it on your end, it is only a matter of time before the IRS figures out you misreported your earnings.
2. Making a mathematical error or other mistakes
Errors happen to the best of us. Double-check that all numbers you enter on your return match what appears on your tax forms exactly.
When you file with TaxSlayer, you don’t need to worry about getting the math right. All calculations are done for you and are guaranteed accurate based on the info you provide.
If you need help, you can ask a tax professional your questions, get email and phone support, and be guided through the entire filing process step by step.
3. Filing with the wrong status
Claiming the correct filing status is important. If you are single, do not claim head of household just to receive a higher standard deduction. If you claim the wrong status, the IRS will find out based on your past returns and how you filled out your W-4. If you’re not sure what your filing status is, find out here.
4. Deducting too many business expenses or business losses
If you have your own business, make sure that any expenses you claim are real and that you have receipts or other proof to back them up in case of an audit. It may seem easy to hide income as business expenses or losses when you’re self-employed, but the IRS will pick up on inconsistencies or percentages that don’t match up. The purchases must be normal and necessary for your type of work. For example, do not the painting supplies that you use for a hobby as part of your construction business expenses.
5. Using round numbers
If your income or deductions are not even numbers, do not round up. Rounding and perfectly even sums are a red flag for the IRS. They expect to see cents and decimals, not zeros, so be sure to report the numbers exactly as they appear on your tax forms.
Remember: When you file using TaxSlayer, your return is guaranteed to be 100% accurate based on the info you provide, and all the calculations are done for you.
6. Making a large donation to charity
Donating to charity is a great way to reduce your taxable income while helping out a cause you are passionate about. Taxpayers are encouraged to donate. However, if you make an unusual or unrealistic donation, you are more likely to be audited.
Make sure that you are being honest about the value, and that your donations are not a significant percent of your income. If you do make a larger than normal donation, be sure to save your receipts and submit them with your return.
7. Claiming the Earned Income Tax Credit or taking the Home Office Deduction
While taking credits and deductions are not immediate red flags for the IRS, the Earned Income Tax Credit and home office deduction are associated with a lot of fraud. If you are taking these credits, make sure you are eligible and that you are taking them correctly.
This article was last edited on September 7, 2021.