What Triggers an IRS Tax Audit?

On: June 15, 2023

One of the scariest things that any taxpayer can experience is finding out that they are facing an IRS tax audit. The first thing that comes to your mind may be whether you are in trouble or how much work the whole audit will involve.

No matter what question is on your mind right now, it is important to secure a professional tax representative to assist you through the process. Not only can it be confusing, but it can also lead to fines and other penalties should the IRS determine that you are at fault for something.

So, did I do something to trigger the audit?

It depends. There are several reasons why the IRS may choose to audit your tax return. Most people never have the IRS audit them in their life and then some people may experience one or even two audits!

Below, we will discuss some of the most common triggers that can lead to an IRS audit. If you have found yourself to be subject to an audit, it is important to work closely with a tax professional to ensure you better understand what is going on and can submit the right documentation to the IRS. Unfortunately, the IRS is NOT on your side!

Taking Too High of Itemized Deductions 

You have likely heard the old adage that you can itemize your tax return and claim everything you use in your home for business as a business-related expense. While that may work for the neighbor down the road, it does not mean it will work for you.

The IRS will audit tax returns that seem to have too high of a deduction for someone else in the same situation. For example, if you are claiming a $3,000 cost for using the printer in your business but the average for other businesses is only $1,000, this can be a red flag.

The three most commonly audited itemized deductions include:

• Charitable contributions
• Medical expenses
• Business expenses

There is nothing wrong with claiming expenses and taking deductions, but you must do so properly. A tax professional can assist you in making sure you are not overpaying but also that you are not sending up red flags for an audit.

Income Is Missing from Your Tax Return 

This is probably one of the most common mistakes that occur among taxpayers. Missing income on a tax return happens when a company reports income for you, but you fail to claim it on your tax return. This can happen for a number of reasons from you not remembering you worked somewhere or received income or never receiving the notice.

A Simple Error 

Errors happen and they are easy to make when you are in a rush, do not understand how to fill out a form, or are simply typing away on the computer. Sometimes, a simple error on your tax return can trigger an audit, especially if you leave off or add an extra number. For instance, an audit could be initiated if you claim you made $35,000 but you actually made $350,000.

Claiming Your Dependents 

Claiming dependents can help reduce the amount of tax you owe and may even boost your refund but claiming them does put you at a higher risk of an audit with the IRS. Unfortunately, this deduction is often used improperly, which has led to a lot of fraud.

Get Professional IRS Audit Representation in California 

You never know when the IRS may want to initiate an audit on you and unfortunately, once you have been selected for an audit, it will be up to you to prove your side. This can not only be taxing on you, but it can mean you may face some penalties too.

It is crucial that you have the best tax audit representation to not only walk you through the process and assist you but represent you in front of the IRS. At Leading Tax Group, our seasoned tax professional will discuss your IRS audit with you and help you better understand it. We will ensure that you get the outcome you desire.

Call the experts at Leading Tax Group today!