While 1.4 million taxpayers receive thorough audits from the Internal Revenue Service each year, more than 9 million get light audits in the form of notices demanding more money, according to 2012 statistics from CBS Money Watch. Anything from a math error to under-reporting your income may trigger an audit, but certain tax breaks – deductions, namely – typically raise more red flags than others.
When filed as a write-off, seemingly innocent charitable contributions often send a red flag to the IRS, especially large charitable deductions and those that are difficult to quantify, such as donated items. Failing to file Form 8283 for donations over the amount of $500 and writing off donations that seem out of sync with your income level can further heighten your chance of an audit.
While filing Form 4562 may sometimes appear more lucrative than taking the standard vehicle deduction, the IRS often targets those who claim 100 percent business use of a vehicle, due to the rarity of this particular situation. Not owning another vehicle for personal use makes this write-off an even more likely trigger.
The home office deduction allows you write off a percentage of everything from rent to phone bills, but the IRS strictly enforces this tax break. If your home office isn't used exclusively and regularly for business, you face an increased audit risk. Multipurpose rooms such as guest bedrooms and family rooms don't often cut it when it comes to being audited for this deduction.
If you rent out property, claiming rental losses can alert the IRS, especially if your adjusted gross income exceeds $100,000. Your chances of an audit increase even more if you claim yourself as a real estate professional without providing a record of the required hours. Claiming losses for a hobby also attracts IRS attention; the larger the losses, the bigger the red flag.
Although freely offered by the IRS to qualified taxpayers, some tax credits have a higher likelihood of triggering audits than others. Speaking to the “Chicago Tribune” in 2012, Karen Reed of TaxResources Inc. notes that the earned income credit and the adoption credit often cause the IRS to take a closer look at your taxes.
If your tax return features deductions or other tax breaks that don't seem to reflect your lifestyle (based on the information you provide the IRS), this may cause the IRS to investigate your bank accounts for unreported income. Finally, tax breaks that are incorrectly reported can come back to haunt you. If you don't keep accurate records of mileage or have receipts for reported deductions, an estimate won't hold water – if you get audited, the IRS disallows deductions without records.
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