- Advertisement -
Home Money 5 "Red Flags" That Increase Your Chances of Being Audited

5 “Red Flags” That Increase Your Chances of Being Audited

- Advertisement -

These are the signs that alert the IRS of a needed audit.

Every year, taxpayers stress about the risk of having their finances magnified by the government. The IRS audits less than 1% of tax refunds. There are multiple reasons the returns draw the attention of the agency.

You can use this guide to reduce tax-related stress. If you’re worried about the chances of being audited, keep reading. Here are the top five red flags.

Related Post: Small business tax planning tips

tax stress

1. Misreporting Income

The IRS reviews what you show versus what your employers reported. If you mess up on calculations, they’re going to flag your return. You should ensure you have all of your W2s and 1099s before submitting information to the agency.

2. Major Changes Reported

People who report changes to their income are going to need to provide detailed information for how you got there. You can prove an increase in pay with paystubs and accounting. Whatever you don’t account for will heighten your risk of being audited.

3. Earning Over 200k

The more you make, the higher your chances of being audited. The people who make over 200k are the ones who have to worry the most. Especially those who bring in an income of one million or more in a year.

4. Wrong Identification Information

You need to check that your tax forms have the correct information. The IRS is on the watch for identity theft during tax season. Incorrect Social Security numbers will attract scrutiny and rejection.

5. Excessive Charitable Donations

There are rules for documenting charitable donations to receive deductions during tax season. The IRS will want proof of your contribution amounts and will compare to your reported earnings for the year. People who can’t prove the total they donated and have income discrepancies can expect to hear from the agency.

Also Read: The Top Personality Traits All Successful Entrepreneurs Share

More Things That Increase Your Chances of Being Audited

The IRS is looking for people who are not paying their annual taxes. If you’re worried about the agency, you should learn everything about what could put you at risk. Here are other explanations for why you could be audited by the government:

  • Low income
  • Losses
  • Inconsistent alimony or child support reporting
  • Excessive meal and entertainment expenses
  • Owning a cash business
  • And more

The good news is there are ways to reduce your chances of being audited. When you continue to make tax payments on time and keep detailed accounting, you won’t have to worry about the consequences.

Independent contractors wondering, “Can I make a fake pay stub to prove income?” should learn more about how taxes work for 1099 employees and self-employed individuals.

Also Read: Three tips on learning business finance online

Protect Your Finances Today

Protecting your finances from the IRS starts with prevention. Now that you’ve learned these five red flags, you can reduce your chances of being audited. With this guide, you’ll avoid the agency and their prying eyes.

There are more ways you can protect your finances. We feature the latest in business, services, and more. Explore our blog longer for more information!

- Advertisement -
- Advertisement -

Must Read

Difference between Founder and Co-Founder?

You must have heard the terms such as founder and co-founder. What do they mean, and what is their difference? It is time to...
- Advertisement -

5 Ways to Improve Your Customers’ Digital Experience

Business professionals always talk about the importance of customer service. The consumer experience determines if a lead turns into a sale, if a sale...

What is the Stock Exchange and How Does It Work?

A stock exchange market facilitates a transaction between financial instrument traders and targeted buyers. The stock exchange operations rely on a set of rules...

10 Important business milestones in the first 5 years

Running a small business and becoming busy with business operations is common. Therefore, setting business milestones and objectives from the beginning is crucial. It...

Related Category Posts

Should A Robot Mop Be The Next Addition To Your Smart Home?

Cleaning is a task that everyone can do without; it takes time out of your day and uses up energy that could be put...

5 Ways to Improve Your Customers’ Digital Experience

Business professionals always talk about the importance of customer service. The consumer experience determines if a lead turns into a sale, if a sale...

How to increase revenue for small business 

A little shift gives you ways to generate revenue from the existing opportunities within your business. Now that you already started your small business,...

How to Recover After a Reputation Crisis

A reputation crisis leaves a company in shambles. There is an impact, and there is a need to rebuild the reputation of the company....

How to Stay Safe Online- Starting Today

There are so many scams, malware and hacks out there right now, and this can all make the internet seem like a very dangerous...
- Advertisement -

1 COMMENT

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Select Language »