After a 16-day shutdown, the federal government is open again. That means agencies, like the IRS, are back at it, collecting money and looking for people who are cheating the government. For a majority of taxpayers, the mistakes are just that. But there are certain things taxpayers do that standout to the IRS and could make you a target for an audit.
Here are some of the items that can raise red flags and cause investigation by the IRS:
BEING SUPER RICH – Making lots of money and being super rich is everyone’s dream come true, but make sure whoever does your taxes knows and follows IRS guidelines. The IRS has a special “wealth squad” to audit the super wealthy.
CLAIMING A LARGE CHARITABLE DONATION – Being generous to charity or a beloved organization is a good thing, but the IRS sees this as a red alert. Make sure you save all of your receipts for any donations made, no matter if you donate with a check, credit card or cash.
CLAIMING A HOBBY AS A LOSS – Hobbies are entertaining, but claiming them as a loss could put make you a top target for an audit.
ROUND NUMBERS – We all learned to round numbers in second or third grade, but taking a deduction in a round number, unless it works out that way, is a red flag for the IRS. Too many zeros makes the IRS curious and could lead to an audit.
BAD ACCOUNTANTS – The IRS is cracking down on bad bookkeepers and accountants by shutting down their businesses. Remember, the people you do business with reflect on you. If you have a questionable accountant, don’t take any risks. Give us a call and we will look into your financial health happily and honestly.
The IRS is a federal agency created to collect taxes, and it will do just that. Make sure you or your accountant do not make mistakes like these that could cost you an audit.