Why am I being audited? 7 common audit flags.

Why am I being audited? Facing an IRS audit can be a nerve-wracking experience.

The thought of having your financial records scrutinized by the IRS is nerve wracking. The process can be time-consuming and financially draining. However, understanding the top reasons why taxpayers get audited can help you avoid potential pitfalls and navigate the audit process confidently.

In this article, we’ll shed light on these audit triggers. We’ll also offer insights into what may prompt the IRS to take a closer look at your tax return. Additionally, we’ll discuss how Sancus Tax, a trusted tax relief professional, can help if you ever find yourself facing an IRS audit.

1. Mathematical Errors and Discrepancies: One reason you might be audited is mathematical errors or discrepancies on your tax return, which are a leading cause of IRS audits. These errors often involve mistakes in basic arithmetic operations like addition or subtraction. Although unintentional, the IRS takes notice of these errors.
2. Significant Disparities in Reported Income: The IRS receives copies of the income you report through documents like W-2s and 1099s. The IRS frequently audits tax returns when these documents reveal substantial differences from the income you’ve reported on your tax return. To avoid this issue, ensure precise reporting and maintain thorough documentation.
3. Excessive Deductions and Credits: Claiming an excessive number of deductions or tax credits relative to your income level or industry standards can trigger IRS scrutiny. While deductions and credits can reduce your tax liability, they must be well-supported by appropriate documentation. Inflating deductions or expenses can increase the likelihood of an audit.
4. Failure to Report Income: Failure to report income, whether intentional or accidental, is a significant audit trigger. This includes income from freelance work, rental properties, interest, dividends, or offshore accounts. Accurate and comprehensive income reporting is crucial to prevent tax audits and potential legal complications.
5. Self-Employment and Business Activities: Self-employed individuals and small business owners face higher audit risks due to the complexity of their tax returns. The IRS closely examines business deductions, income sources, and compliance with tax laws. To minimize audit risks, maintain accurate records and seek professional guidance to ensure compliance.
6. Inconsistent Filing History: Frequent amendments or inconsistencies in your filing history may raise suspicions at the IRS. While it’s acceptable to amend a tax return to correct errors, excessive amendments or inconsistencies can lead to increased scrutiny. Maintaining a consistent and accurate filing history can reduce the likelihood of audits based on your filing history.
7. High-Income Individuals: High-income individuals are often targeted for audits due to the potential for larger tax liabilities. The IRS carefully verifies that high earners accurately report their income, deductions, and credits. While high-income individuals have legitimate opportunities for deductions and credits, their returns undergo more thorough examination.

Already Facing an Audit? Here’s How Sancus Tax Can Help:

If you’re already undergoing an IRS audit, taking prompt action is crucial. Reach out to Sancus Tax, a reputable tax resolution firm specializing in handling complex tax problems. Our expert team is equipped to provide professional assistance, ensuring that you navigate the audit process with confidence. If you’ve already been audited and don’t agree with the results, read this, and remember, taxpayers have rights – to learn more check out the Taxpayers Bill of Rights.

Whether you’re dealing with IRS issues, owe $40,000 or more in back taxes, or are currently facing an audit, don’t hesitate to contact Noble Pacific Tax Resolution. We offer a free and confidential consultation to thoroughly explain your options and assist you in permanently resolving your tax problems. Contact us today to regain your peace of mind.