What are some tax filing "red flags" that can trigger an audit?
Well, you've sent your tax return off and every thing is right to the best of your knowledge. Then you're talking with some friends and they say, "well what about this?" Well that's a red flag! Well what do we mean by a red flag? You know is it a little red flag, or is it a giant red flag? What could trigger an audit? Well, only the IRS and very fiew people know specifically what could trigure an audit of your tax return. How ever there are certain things that will put up flags to the government. One of the things you could think about is, I'm looking at my total income, and then I look at all my deductions and my deductions are bigger than my income. You know, that might put up a little red flag. That's like saying, how could you spend all this money if you didn't have enough money coming in. Some of the deductions that you put on your return might be considered a red flag. An office in the home is one of those little flags. Contributions to a charity while you can deduct 50% of your income. Statistically most people are down to maybe the 10 or 12 percent range. So if your contributions are very high, it might put up a flag. It's not to say that it's wrong, or that you're not in-titled to the deductions, but it's a greater likely hood that maybe they'll audit your tax return. If your income is real high, up in the $100,000, $200,000 range the IRS figures that the higher the income the more likely you are to have problems on your tax return, that they can fair it out. Also bare in mind that if they found a mistake they're gonna be able to generate more tax from that mistake, than if they're looking at some low income tax return. What's a red flag? Anything can be a red flag. Just be aware of it and know that you're putting some thing on your tax return, that you have the details and the documents that substansiate that deduction.
