Audit Triggers For IRS Audits

• What are your chances of an audit?
• Does filing a 1040X trigger an IRS audit?
• Just what would trigger an IRS audit?

Many things can trigger an IRS audit.
Numerous red flags such as the following:

• Use of office in home deduction
• Use of employee business expense
• Large charitable contributions
• Use of contract labor
• Filing a Schedule C for self-employment
• Use of rental property

Things by themselves that can trigger audits:

• The higher your income, the greater your audit chances
• Being paid in cash will increase your chances
• Mistakes on the tax return
• Income reported less than states on W2′s, 1099′s, and K-1′s
• Expenses that don’t look correct in relation to income
• Being part of an IRS high risk targeted group
• Math errors
• Not reporting 1099 income on Schedule C
• Leaving off interest and other 1099B income
• Leaving off stock transactions
• Not reporting K-1 information and other third party payer information
• Putting items on the wrong forms
• Taking positions that look odd on the face of the return, without explaining them
• Reporting income, or not reporting income, from off shore accounts
• Having your income on a W2 and then having a Schedule C showing a loss
• The use of loss carry backs
• Taking the capital gain exclusion on the sale of a house
• Taking depreciation in excess of what is allowed

There are so many audit triggers that we can never understand why people think they can prepare their own returns using tax software, such as Turbo Tax or Tax Act! Make sure you have us prepare, or at least review, your tax returns.

Payroll Audit Triggers

• Filing 941 and 940 late or not at all
• Frequently making payroll deposits late or not at all
• People reporting you to the IRS
• Excessive contract labor on your return

If any of the above list of triggers apply to payroll reports then that might cause an audit, too. We deal with the IRS everyday and know the steps that are needed to resolve your tax problem. Make sure you do the smart thing and hire professional representation to ensure you get the best resolution in place.