Receiving an audit notice from the IRS can be a stressful and daunting experience. However, understanding the common triggers for audits and knowing how to navigate the audit process can help ease your worries. In this blog post, we will explore the reasons behind IRS audits and provide you with practical tips to handle them effectively.
1. Unreported Income: The Hidden Red Flag
One of the most common reasons for IRS audits is unreported income. Whether it's intentional or accidental, failing to report all your income can raise suspicion and trigger an audit. To avoid this, ensure that you accurately report all your income, including earnings from freelance work, rental properties, and investments. Keep detailed records and consult with a tax professional to ensure compliance.
2. Discrepancies and Mathematical Errors
Mathematical errors and discrepancies between your reported income and the data the IRS has on file can also lead to audits. Double-check your tax return for any mistakes, such as incorrect calculations or mismatched figures. Utilize tax software or consult with a tax professional to minimize the risk of errors and discrepancies.
3. High Deductions and Unusual Expenses
If your deductions are significantly higher than the average for your income bracket, it may raise a red flag for the IRS. Unusually high deductions or questionable expenses can attract their attention. Make sure you have proper documentation and receipts to support your deductions. Keeping organized records will help you substantiate your claims and navigate the audit process smoothly.
4. Self-Employment and Small Business Audits
Self-employed individuals and small business owners are often subjected to audits due to the complexity of their tax situations. The IRS pays close attention to self-employment income, deductions, and business expenses. Maintain separate business accounts, keep detailed records of your income and expenses, and consult with a tax professional specializing in small business tax law to ensure compliance and minimize audit risks.
5. Prior Audit History
If you have been audited in the past and the IRS discovered significant issues, it's more likely that you will be audited again. The IRS may keep a closer eye on your tax returns to ensure compliance. Learning from past mistakes, seeking professional guidance, and taking extra care to accurately report your income and deductions can help you avoid future audits.
Dealing with an IRS audit can be overwhelming, but with the right knowledge and approach, you can navigate the process smoothly. If you find yourself facing an audit or have concerns about your tax situation, The Carver Law Office, PLLC is here to help.
Contact Our OKC IRS Audit Lawyers
Our experienced team of tax attorneys specializes in IRS audits and can guide you through the process, ensuring your rights are protected and helping you achieve the best possible outcome. Contact us today to schedule a consultation and let us assist you in resolving your tax audit concerns.
Call (619) 853-3009 for a free consultation to discuss your case and help you understand your best options, or contact us online 24 hours a day.