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IRS Audit Flags, Post #9
Another item that increases the chances of Internal Revenue Service scrutiny are large changes in deductions from year to year. For example if you claim $100,000 in charitable contributions one year, the next year, zero, and the next you you once again claim $100,000.
Mike Sylvester, CPA/ABV -
IRS Audit Flags, Post #8
Another item that increases you chances of IRS audit is a return that shows far more expenses than income. This shows that you spent more than you made and often makes the IRS wonder where that money came from. If your itemized deductions (Mortgage interest, charitable contributions, medical expenses, and the like) far exceed your […]
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IRS Audit Flags, Post #7
Another item that increases your likelihood of an IRS audit is using round numbers on your return. For example you may claim $20,000 on itemized deductions.
The IRS feels that if you use round numbers you may be “estimating” and that you may not have receipts to defend your deductions.
Mike Sylvester, CPA/ABV -
IRS Audit Flags, Post #6
The Internal Revenue Service (IRS) has developed a “secret” set of “normal” parameters for taxpayers in different categories. If too many of the parameters they monitor fall outside of the “normal” parameters for a given tax payer then that taxpayer is more likely to get audited.
This is best shown with an example:
Lets say the IRS […] -
IRS Audit Flags, Post #5
This is the fifth post in a series of posts explaining some of the common reasons why the Internal Revenue Service (IRS) chooses to audit specific tax returns.
There are certain business and industries that are more likely to get audited than other businesses and industries. This is due to the fact the the IRS feels that […] -
IRS Audit Flags, Post #4
You are more likely to be audited by the Internal Revenue Service if you repeatedly claim small business losses on your tax return. This is especially true if you operate either a sole proprietorship or a single member LLC for which you file a schedule C with your personal tax return each year. These schedule […]
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IRS Audit Flags, Post #3
If your income fluctuates by large amounts from year to year your chances of being audited by the Internal Revenue Service increase.
When the Internal Revenue Service sees these fluctuations (Or more likely when their software notices and flags these income fluctuations) they often suspect that something is wrong.
Once again if your income is fluctuating it […] -
IRS Audit “red flags”, Post #2
This is the second post discussing situations that increase your chances of incurring an audit from the Internal Revenue Service.
Certain expenses listed on your tax return are more likely to draw the attention of the Internal Revenue Service.
Meals and entertainment expenses are often scrutinized by the IRS since they are commonly abused by certain taxpayers.
Automobile […] -
Series of posts illustrating common red flags that may lead to an IRS audit, Post #1
There are many red flags that increase the odds of your tax return being audited by the Internal Revenue Service. I will be discussing several of the more common “red flags” in a series of posts over the next couple of weeks.
One of the most common “red flags” is a tax return that has an unusually […] -
Depreciation and why it is important to your business
Depreciation is the reduction in the value of an asset due to usage, passage of time, wear and tear, depletion or other such factors. When you purchase an asset for your business and place it in service you are allowed to write off a portion of the purchase price each year as depreciation expense.
For example, business […]