3 Mistakes Which Can Trigger an IRS Audit

IRS Audit

IRS has to process millions of tax returns and the IRS has many things which will trigger an audit.  While you may not have done anything wrong, but the return which you have filed has something which signify that you are trying to defraud IRS. If you have performed everything correctly you can prove that you are paying the taxes.  In such an event, IRS will then agree and will leave your return the same and the audit will be lower. The audit can be conducted by the mail or in person and here are a few possibilities. First the IRS decides that all is well and the return stays the same. The IRS proposes a change and you agree to the same and pay more taxes or the penalty. The IRS suggests a change and while you understand it, you don’t agree. In this case you appeal and enter into mediation with the IRS. Here are some audit triggers which you need to be aware of (before taking tax problems help in NJ):

 

1. You Have Reported Wrong Taxable Income

You should not lie about the taxable income, because you and the IRS received the W-2 and 1099 forms for both the full-time employees and the self-employed individuals. If you have made a math error, the IRS will correct that. But if you do not provide the correct details then there is going to be a challenge.

 

2. Giving Away Huge Donations

The IRS will raise it eyebrows if you are giving large donations as charity when you do not have much income.  You have given a huge donation to the college that you have graduated from and then you have lost your job which makes reduces the income significantly.  It is understandable and you will not be asked any questions. You are getting creative with your charitable deductions. You need to get large donation appraised then you need to file form 8283 if you give any donation above USD to make sure that you keep all the charity receipts and follow the tips for the charitable donations.

 

3. A Steak Dinner with Clients

The rules for claiming this are strict and it is a smart idea to read them before you make the government pay for your rights out on the town. It is perfectly fine if you deduct the cost of a reasonable priced meal where you entertained the potential clients for your business while discussing the business. If you do not properly make deductions that they may act as a trigger for audit. You need to keep all the receipts and also record the dates and times as well.

 

In the End

If you can avoid these mistakes, you can avoid audits and you still need tax problems help in NJ you can take the help of a tax accountant firm who can give you professional advice on any issues that may arise. So file your returns properly and stay happy.

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