November 21, 2018
It is not really certain what might lead to an audit by the IRS, and this results in many taxpayers acting nervously.
Although it is not really clear what leads to an audit, tax experts say there are some specific factors that can enhance the possibility of you getting selected for an audit. Some of which include;
You didn’t reveal all your taxable income;
The IRS has access to copies of all 1099s and w-2s and has a detailed understanding of a filter income, so you may have been selected if you didn’t report everything. It is one of the easiest ways to get audited. If you omit an earning by chance, the IRS would easily discover the omission and you may be chosen for an audit.
You made claims to the earned income credit;
This is a credit applied to moderate and low-income filers and can be worth over $6,000 which makes it one of those credits fraudulently claimed. This is a reason you may have been selected.
You filed a Schedule C;
The majority of filers who are self-employed fill out a schedule C to reveal the amount of money they realized or lost in a business.
Making math errors;
Don’t input the wrong figure on your tax return. Ensure you don’t get carried away and forget to place in a figure. Ensure you cross-check the figures as you would have to pay fines even if your mistake was accidental. Try as much as possible to avoid errors.
Other reasons that a taxpayer may have been selected for an audit include;
– Failure to reveal income or sales
– Failure to carry out filing for a return
– Surplus exclusions or credit claimed on a return
– Refund claims or filed returns that are fraudulent or incorrect
– Discrepancies observed when there is comparison to other information obtained from alternate sources
– Exploitation of exemption certificates
– Claiming too many charitable donations
You may have been selected based on a selection that was random or because during screening via computer – records didn’t tally with the provided information or math errors. Selection could also be from examinations that are related to investors or business partners that were selected for audit. Wealth is another factor, the higher your income, the higher the possibility of you being selected for an audit.