5 reasons why you may be audited this year, according to financial experts

There are several risk factors that could lead to a sequence with the IRS.


Perhaps the only thing worse than compiling your taxes each year is to discover that you are audited after all your hard work. Fortunately, there are a lot of services and Software options This can help you avoid potential headaches or expensive fines, even if you are in a time crisis. But if you are looking for a better idea of how to avoid a race with IRS, there are a few things to remember before depositing. Read the rest for the reasons you may be checked this year, according to experts in finance.

Read this then: The IRS warns that the complaint of these credits can provide you with audit and a fine .

1
You have badly declared your income.

A young woman sits at a desk late at night and tries to work on her taxes. She looks discouraged as she reads a W-9 and other paperwork. Her laptop is open in the background.
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Preparation to produce your taxes can be relatively simple if you are dealing with a single pay check. But if you have a complicated financial situation with multiple income flows, you can land in hot water if you do not pay attention while filling out the forms.

"The IRS uses a program to match what has been reported to the IRS of employers, banks, brokerage and other sources compared to what you have reported in your income declaration. If there is With one difference, it could open you to an audit, "said Robert Farrington , founder and CEO of The college investor .

"So, make sure that you are precisely entering all your information from these W2S, 1099 and other forms to avoid an audit. If there is an error on one of them, you must work with the one who Delivered to resolve it, "he says.

2
Your income changes from year to year.

hand of Accountant calculate tax return and work at home
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Whether it is a job change or an unforeseen financial emergency, everyone has good and bad years with income. However, in addition to the stress of uncertainty, significant money changes can also cause those responsible more. AE0FCC31AE342FD3A1346EBB1F342FCB

"If your income increases and decreases each year, the IRS might want to know more about the reasons why it does this," Riley Adams ,, Founder and CEO of Wealthup.com, tells Better life . "It may be because you ask for different credits and deductions each year, your income is not consistent, or perhaps something else."

But that does not necessarily mean that you should pigeon your income. "You are not penalized to have a dynamic income, but compared to income tax declarations with a stable taxable income from year to year, that certainly highlights your return," explains Adams. "If this is only part of your normal income and nothing ordinary, you should not sweat: life has its ups and downs, just like your income."

"As always, be sure to document everything, provide tax positions supported to your declaration and possibly check with a professional if you have any questions," he suggests.

Read this then: 4 warnings on the use of turbotax, according to experts .

3
You put badly for your business.

a man looks confused at a paper, computer
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Entrepreneurs know that companies can present themselves with all forms and sizes. This can often justify bringing a Outdoor professional To ensure that everything is managed correctly before depositing for tax purposes. Otherwise, it could end up becoming a reason for a more in -depth investigation.

"If you have a concert or a business, there are many things that could trigger an audit," warns Farrington. "For example, excessive deductions or depreciation that does not make sense to your business. Or unusual losses that could indicate that the company is a hobby and not a business."

He adds: "You must realize that the IRS has millions of commercial returns, data points, and even more to see if your business is" normal "or not. So, whether you claim items in your income tax return , you must be able to prove that expenses were ordinary and necessary during business. "

And there is another essential element in the classification of information to keep in mind.

"Round figures are a red flag," said Moira Corcoran , A accountant and tax expert at Justanswer. "If you put the same $ 8,000 for marketing, $ 5,000 for legal, or $ 3,000 for travel, IRS knows that you do not add legitimate deductions."

4
You make a lot of money.

1040 individual income tax return form and money. Tax payment, filing taxes and financial planning concept1040 individual income tax return form and money. Tax payment, filing taxes and financial planning concept
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In the big scheme of things, earning too much money is not something that people are likely to complain about. But according to experts, your increased income could put you at higher risks of a potential audit.

"If you make a big income and you think that paying your fair taxes will be enough to keep the IRS on your back, you could be surprised," said Adams. "You may very well be right, but if you try to become cute and claim tax credits and deductions focused on high income, but hurt it, you can expect the IRS to hit Your door, but not literally, because they are usually generally send something by post. "

"The IRS has more to win by examining a taxpayer with high income than for someone who earns less. So, they will be more likely to verify that you have sprinkled your i and cross your T," explains Adams.

"Make sure to check - then to reveal - what you claim from your declaration before classifying it. You will want to know that you do not apply a lot of the tax positions that you think will reduce your taxable income, but will eventually cause more headache than expected, "he suggests.

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5
This cannot be the fault on your part.

Filing taxes online using a computer and being audited
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No matter your situation, there can happen a point where the confusing process for preparing and filing your taxes surprises you. But even if you have managed to do everything, you could always be contacted by the authorities.

"Remember that an audit does not necessarily mean that you have done something wrong," said Farrington. "The IRS makes an" audit ", which means checking everything you have pointed out."

And it is not always found in penalties. "I saw certain cases of audits in favor of the taxpayer, which means that the IRS had in fact a more important reimbursement after everything was verified," he said. "This is why the important part is to keep specific records and documents."

Best Life offers the most recent financial information of the best experts and the latest news and research, but our content is not supposed to replace professional advice. Regarding the money you spend, save or invest, always consult your financial advisor directly.


Categories: Smarter Living
Tags: Finance / /
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