IRS Tightening Down: 5 Tax Audit Red Flags

Here's some news we all want to hear -- the IRS is planning on being more aggressive with tax audits. There's good reason for this, though, as there's an estimated $300 billion difference between taxes owed and taxes paid. That said, no one likes the prospects of more audits. According to Yahoo, here are the top five items that red flag your return and make it more likely that you'll be audited:

• Earning too much money -- Once an income goes over $100,000, the chances start increasing.

• Giving too much to charity -- Once contributions exceed 5 percent or 10 percent of income, it may raise questions.

• Knowing when the Alternative Minimum Tax applies to you -- Failing to submit an AMT schedule when you are in a high-risk group may grab the IRS's attention.

• Taking too many credits -- Tax credits are another area of concern, especially for people at the lower end of the income scale.

• Careless errors -- Matters as small as incorrect Social Security numbers, math errors or simple misspellings can bring a tax return to the attention of the IRS.

Ok, here's where I stack up:

1. Yikes! I'm on the radar.

2. Double yikes! This means that anyone who tithes is automatically on their hit list.

3. One reason I use a CPA to do my taxes.

4. Another reason I use a CPA to do my taxes.

5. Another reason I use a CPA to do my taxes.

If audited, I don't have anything to fear -- I keep good records and have had a professional firm complete my taxes for years, so it would be no big deal. That said, I'm not raising my hand and volunteering to be audited either!

Comments

I recently attended a presentation by a tax professor, he said that the year you file your taxes it will be very unlikely you will be audited, the next year there is a chance to be audited, but the most likely time you will be audited will be 2 years out, and after that you should be in the clear.