January is audit notice month; therefore, ’tis the season for many of us to cringe as we head to the mailbox each day. Most law abiding citizens such as ourselves don’t intend on making mistakes or inadvertently drawing attention to our return, but we are sometimes audited by the IRS anyway. Here are some common triggers that can help you avoid “mailbox phobia” this coming tax year.
- Mistakes of your return: The “I didn’t know,” excuse never works with the IRS. This can be classified as taxpayer negligence and often garners audit. When a return is selected for audit, the IRS runs the numbers and calculations you supplied on your return. If the information you provided doesn’t add up, be on the lookout for a notice of inquiry. If you receive a notice, be sure to contact an accountant as soon as possible.
- Self employment: The IRS loves the entrepreneur – almost as much as Santa. If you are self employed you are almost three times as likely to face an audit. The IRS feels small businesses are the most likely to cheat on their taxes; therefore these entities and individuals are singled out among the masses.
- Excessive write-offs: The IRS scrutinizes those who they feel may be mixing business with pleasure. If you have excessive write-offs, especially higher than normal meal and travel expenses, the IRS may choose to dig a bit deeper than normal into your return.
- Home office: If you work from home – surprise! The IRS wants a peak at your home office. If your home office is considered to be in a “dual purpose” area such as a bedroom or child’s playroom, the IRS most likely will not allow it as a tax deduction.
The best way to avoid unnecessary IRS inquiry is to hire a professional tax accountant. At Roberts Tax Advisory, we understand tax forms and returns can be complicated, please contact us for more information on how to make this coming tax season as stress-free as possible.