Avoid An Audit: The IRS Is Open Again For Business

Brigade Bookkeeping
November 4th, 2013
One Comment

auditAfter 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:

HOME-BASED BUSINESS LOSSES – Statistics show that most businesses fail within five years, but did you know that a home-based business, classified as a Schedule C, that loses money three out of five years in business, may be considered bogus by the IRS and could put you at risk of an audit.

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.

1 thought on “Avoid An Audit: The IRS Is Open Again For Business”

Leave a Reply

Your email address will not be published. Required fields are marked *