Raising The Red Flags: How To Make Sure Your Taxes Are In Order To Avoid An IRS Audit
PITTSBURGH (KDKA) -- With just over one month before the tax deadline arrives, one thing is for sure -- no one wants to be audited by the IRS.
Nothing is ironclad when it comes to taxes, but there are some ways to decrease your already slim odds of being audited.
There's nothing like the cringe factor when a letter from the IRS arrives in your mailbox, but TurboTax CPA and tax expert Lisa Green-Lewis says not every letter from them is a notice of an audit.
"There are things called adjustment letters, but people panic when they get anything from the IRS," Green-Lewis said.
Those adjustment letters are sent out when you've made a math error or left off some minor income.
Eckert Seamans' Michael Herzog says to make sure you gather everything before filing your taxes.
"Make sure that you have all of your W2'S, all of your 1099's, and that includes your interest in dividends statements," Herzog said.
The IRS knows what forms you have received and have ways to match those documents up, so if you miss one, that will immediately generate a mismatch of income, which will likely prompt a letter being sent to you.
When it comes to claiming donations, be careful. If there are large donation amounts deducted compared to income, it could be a red flag, even if the donations don't seem significant.
WATCH: KDKA's John Shumway reports:
"They have a general sense on all of the similarly situated taxpayers of what is the average charitable deduction, and if yours is significantly higher than that average, that'll immediately will generate a red flag for the service," Herzog said.
The key is to try and fly below the radar of the IRS' audits. The agency is stepping up enforcement and the more money you make, the more your chance of an audit rises.
"In recent years, the IRS is auditing less than 1% of individual tax income returns," Herzog said.
When it comes to business expenses, like claiming a home office if you run a business out of your home, but it must be a dedicated space where you are actually doing business.
Regarding child tax credits and stimulus payments, you must be careful to make sure you're not overclaiming, but the IRS is watching those like a hawk.
If you're claiming expenses, make sure you're able to document everything.
