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 large amount of itemized deductions in relation to the amount of income listed on the return. The Internal Revenue Service has grouped tax payers into several different income groups and has determined a range of “reasonable” amounts of itemized deductions for each income group.
If you report a higher amount of itemized deductions than the IRS considers “normal” for your income then your chances of IRS audit increase.
This does not mean you should not claim these large deductions; it just means that you need to document these deductions and realize that by claiming these large deduction the odds of an audit increase. This means you need to keep good records for all of the items listed on your tax return not just the “itemized deductions!”
Mike Sylvester, CPA/ABV
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