Typically speaking, people see an IRS tax audit as something to be avoided at any cost. Being handed an audit basically means sitting through a boring meeting with an IRS official where they spend several hours telling you that you owe more money in taxes than you have already paid. However, it’s not really their screw up that landed you in this situation. Somewhere along the way when you were paying or filing taxes, you made some kind of error in the paperwork that placed you under the IRS’s scrutiny. Thankfully, this means that avoiding this happening in the future is a simple matter of knowing what not to do going forward. So, if you are in the middle of tax return preparation in Yonkers, NY area, and you want to know what make the IRS audit someone, here are the top reasons you may be audited.
#1. Omitted info and other such errors
This is by far the easiest way to get audited. Everyone forgets some detail that they write off as minor and unimportant, only for the IRS to heavily disagree. And even if you do remember everything, you need to check and double check your math, otherwise any mathematical errors left in your tax returns can lead to an audit as well. This is why people who can afford such, decide to hire someone to do their taxes for them, since a professional is less likely to make these sorts of small but costly errors.
#2. Failure to report income
The IRS and its ability to monitor the tax payments of the citizenry are not a system that can be gamed. They receive copies of the same W-2’s and 1099’s that you do, and thus know exactly what you make per year. Thus, the IRS expects you to accurately report your yearly income, with the punishment for doing otherwise being a costly audit. Every bit of income you make, from wages to self-employment income, should be reported accurately and honestly.
#3. Rounding your numbers
Humans by nature like everything to be as neat and tidy as it can be. This includes numbers, so there’s a temptation when filing your tax returns to round up all of your numbers to make it look nicer. This is a bad idea, since neat and tidy numbers like that are incredibly suspicious, because of how unlikely they are. The IRS wants the exact number, down to the last odd number and decimal point, as it reflects honesty and thoroughness from the person in question.
Ultimately what avoiding a tax audit boils down to is being honest and being thorough. Making sure all of your math lines up, no relevant info is left out, and all yearly income reported and accounted for. Remembering these ways the IRS can audit you can save you days of trouble and an untold amount of your money.
