Income Tax Audit – Avoid the Common Red Flag Items

4Aug/10Off

Income Tax Audit – Avoid the Common Red Flag Items

To help avoid an income tax audit, there are certain things you must make sure you do not do.

One way to automatically get the attention of the official looking at your return is if you forget to sign your return. If this is forgotten, then an official will be wondering what else you forget and probably take a very close look at your entire return. This sounds so basic but it is true. It happens so often the IRS even placed the signing of your return on the checklist of things to do before sealing the envelope.

Calculational errors are a very easy mistake to correct. When you are finished, recalculate every equation until you conclude with matching numbers for each line. If you are dyslexic, have another member of your household check the math. The error is perceived as a person not paying attention to details or not caring enough. This is why the IRS official will get so annoyed with this type of error. If it is too obvious, an audit can be triggered just because you annoyed an official.

Most every American makes donations to the needy and poor. Many take a tax deduction for what they contributed in the name of charity. If this is your case, be honest with the actual worth of the items given. The general rule here is that a donated item is worth at least 1% of its original value when it was purchased and never more than 30%. There are not enough exceptions to this to list any. This includes a pair of designer pants that were worn only once. You might have just paid $50 for them, but do not claim more than $15 on your tax return. To the IRS, they are just a pair of pants.

These are three very common triggers that could cause an income tax audit. By avoiding these mistakes, you could save yourself a lot of misery.

Of course, the above is not legal or accounting advice -- it is for informational purposes only. Before making any decisions regarding legal or tax matters, it is vital that you consult a licensed professional lawyer or tax accountant.

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