{"id":91,"date":"2012-03-31T19:18:34","date_gmt":"2012-03-31T19:18:34","guid":{"rendered":"https:\/\/ayoub-associates.com\/blog\/?p=91"},"modified":"2012-07-31T04:46:37","modified_gmt":"2012-07-31T04:46:37","slug":"9-warning-signs-youre-about-to-get-audited","status":"publish","type":"post","link":"https:\/\/ayoub-associates.com\/blog\/9-warning-signs-youre-about-to-get-audited\/","title":{"rendered":"9 Warning Signs You’re About to Get Audited"},"content":{"rendered":"

The IRS is on the prowl–possibly for you. Thanks to improved detection
\nsystems and computerized checks, the IRS can more easily identify red flags
\nthat trigger audits, says Joseph Perry, a partner at Marcum LLP, a public
\naccounting firm. “They definitely contact taxpayers
\n<\/a>more frequently,” he adds.<\/p>\n

Contact typically starts with a letter requesting more information and can
\nlead to in-person meetings. Perry says it’s usually triggered by a tax return
\nthat contains something unusual, such as an above-average deduction or change
\nin income from previous years. As long as the taxpayer can defend his filings
\nwith the proper paperwork and logic, Perry says he has nothing to worry
\nabout–other than the time it takes to respond.<\/p>\n

Before you start looking anxiously at the mailbox, wondering if the IRS will
\nbe mailing you a letter, consider whether any of these nine signs that you’re about
\nto get audited<\/a> apply:<\/p>\n

1. You made a lot less money last year<\/strong>. Perry says the IRS
\nlooks out for any major changes in income, which can signify that a taxpayer is
\nunder-reporting his earnings. Since the IRS tracks historic data, people who
\nsuddenly start reporting much less income can be flagged for an audit.<\/p>\n

2. You lose or forget to file a form.<\/strong> Since employers send
\ncopies of all 1099 forms and W-2 forms to the IRS as well as to you, if you
\nlose your version or forget to file it with your taxes, the IRS can flag your
\nreturn for review. If you receive a form that looks like it has an incorrect
\namount or inaccurate information on it, Perry suggests talking to your employer
\nbefore filing your taxes<\/a>. You want to make sure the information you provide to the
\nIRS matches up with any other information they are receiving about you.<\/p>\n

3. You work for yourself.<\/strong> It might not seem fair, but being self-employed<\/a>
\ncan raise red flags for the IRS, especially if you claim your home office and
\nother costs as business expenses but don’t earn much income. “The IRS
\nquestions those type of businesses,” says Perry. His advice is to keep
\ncareful track of all paperwork so you can defend any deductions and credits you
\ntake.<\/p>\n

4. You claim losses from a hobby.<\/strong> While writing off
\nbusiness expenses can be legitimate, it’s illegal to pretend a hobby is a
\nbusiness and then write off the related expenses. For example, if you enjoy
\nwoodworking, you might practice the craft on the weekends for fun. Doing so
\ndoes not enable you to write off the cost of wood and tools. (If you were selling
\nthose creations online<\/a>, that would be a different story.) The difference
\nbetween a small business and a hobby, says Perry, is that a business “must
\nbe entered into and conducted with the reasonable expectation of making a
\nprofit.”<\/p>\n

5. Deducing home office (or car) expenses.<\/strong> While plenty of people can
\nlegitimately claim home office expenses on their taxes, some people do so
\nincorrectly. Merely checking email from home after work, for example, does not
\njustify a home office deduction, says Perry. In order to qualify, the home
\noffice must be used for work only. Likewise, claiming a car as a business
\nexpense can also raise red flags; Perry urges taxpayers doing this to keep
\ncareful track of how much they use the car for business versus personal use.<\/p>\n

6. You included expensive meals and entertainment costs among your deductions.<\/strong>
\nThe IRS often double-checks these types of claims to make sure they are
\nlegitimate business expenses, says Perry.<\/p>\n

7. You were particularly generous this year. <\/strong>Perry says the IRS is on the lookout
\nfor people who inflate their charitable donations, and that the agency takes a
\nclose look at taxpayers who say they donated $500 or just under, since anyone
\nwho donates more than that amount must file form 8283. (And if you do donate
\nmore than $500, be sure to file that form.)<\/p>\n

8. You maintain an overseas bank account. <\/strong>The IRS has added more reporting
\nrequirements this year for people with money in foreign accounts. Failing to
\nreport one could trigger an audit.<\/p>\n

9. Your numbers don’t match. <\/strong>If numbers on various forms don’t match or add up correctly,
\nthe IRS is likely to notice and look into any disparities. So treat your taxes
\nlike a final exam in algebra and check over all the numbers before submitting.<\/p>\n

As long as you know you filed your paperwork properly, you can sit back and enjoy any refunds coming your way.<\/p>\n

By <\/cite>Kimberly Palmer<\/em> | <\/cite>U.S.News & World Report LP<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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