Some things that could trigger an IRS correspondents?
IRS does not usually scrutinize every tax return. In fact, it was reported that IRS checks about only 1% of all taxpayers in the United States. There are certain things that could trigger the IRS tax problem, you may want to learn them to stay off the radar of this tax-monitoring body.
Red flags that trigger IRS tax audit
- High income earner tax preparer
Top earners are more likely to get an IRS letter than low earners. The more people make, the more chances of them hiding some of it from IRS. Of course, IRS know this and target top earners.
- Self-employed
When you work for a large company, your employer usually keeps your taxes throughout the year, and report your income to the IRS, it is much harder to find space to maneuver your taxes intentionally or not. But when you work for yourself the case is different so the IRS may have more interest in your tax returns.
- You have a shady tax preparer
Once the IRS identifies a tax preparer who cut corners, the Agency may consider some or all previous tax returns the tax preparer have submitted to check for other possible anomalies. In this article some things that could trigger an IRS red flag? This is the worst, unluckiest situation you can get into
- Filed by hand
Four out of five people now e-file their returns, but there are still a lot of people who favor the old method of pen and paper. By using the online software to complete your tax returns limits the potential for many errors such as miscalculations, transposed digits, leaving required fields blank. But those who file by hand often make mistakes, which can make the IRS take notice.
- Someone tipped the IRS
IRS rewards whistleblowers with cash for information leading to a successful examination. In 2014, the services paid over $52 million total to whistleblowers. In addition, the IRS has in the past launched investigations on the basis of newspaper reports and even social media messages.
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Claim large deductions are a major in Some things that could trigger an IRS examination
Large tax write-offs especially in relation to your income – can attract IRS scrutiny. Charitable donations, particularly non-cash, are among the most common to maintain the difference between the value of assets and the actual write-off. The differences in humanitarian write-offs usually carry a letter from the IRS asking for additional documents. If you can provide them, you can put the matter to rest. Otherwise, you may have to write a check to Uncle Sam.
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Unfiled or late tax filing
Always report your income and file your taxes whether is necessary or not. There is an old saying it goes like this “It’s better to be safe than sorry”