Tax day may be over – but the worst part may lie ahead. Getting audited. So, here are the 4 red flags that increase your odds of an IRS audit.
#1: A higher-than-usual refund. Beware if your tax preparer finagled a super-high refund for you. But told you not to worry about it if you didn’t have receipts and documentation. The fact is, you’re legally responsible for what’s on your tax return. And if your tax preparer deducted things they shouldn’t have, that’s tax fraud. And you’ll be fined, big time. Not them.
Another red flag that’ll trigger an audit: Making mistakes, or accidentally omitting information. The number one tax return mistake? Not including the correct Social Security Number. Followed closely by math mistakes. So, go back and carefully proofread everything – including your name, address, and Social Security number. It’s better for you to catch a mistake and file an amended tax return, than for them to find it first. Because once the IRS finds one mistake, they’ll take a closer look at everything.
What else can trigger an audit? A friend or relative telling the IRS you’re a tax cheat. Even your closest friend might be tempted to turn you in. Because the IRS rewards whistleblowers with 30-percent of any additional tax or penalties it collects from cheaters.
The final audit red flag: You have a home office. A lot of taxpayers consider any part of the house where they work to be an office. But if you also use your workspace for watching TV or cooking, you can’t deduct it! If you did that, you may want to re-file.