Advanced Technology: The IRS has upgraded. Taxpayers audited by the IRS are now selected by computers, not human beings. The computers run a fine toothed comb over tax returns, searching for irregularity. If the computer determines something is wrong, the tax return will be selected to be audited (reviewed.) But there's something you may like to know: some taxpayers are more likely to be audited than others.
Work Here?
If you work in any of the following fields, you're more likely to be audited.
- People who work in cash intensive businesses: People in this line of work, such as Hairstylists, will often not report their entire income. Thus, people in this field of work will often be audited. Be careful, and list all of your income. Even your tips.
- Business Owners: This includes accountants, lawyers and doctors who run their own business and do their own bookkeeping.
The Hints:
If IRS computers catch any of the following being done on your tax returns, you are likely to be audited.
- Unusual Deductions: Taxpayers who make large and unusual deductions are easily spotted by IRS computer. So only make sure your deductions are justified before you submit them!
- Drastic Income Change: The computers look out for rare and odd income reporting. It's strange when income changes dramatically from year to year. It's strange when there are lots of round numbers on a report, like 1,000 (these are rare in real life). If your income is low compared to the where you live and what you have to pay, this is another red flag. Incomplete returns are also more carefully scrutinized.
- Medical Deductions must exceed a certain amount of your income or they can not be claimed.
- Charity deductions and home office deductions are the ones that are going to be questioned the most as these are the hardest deductions to prove.
Listed Above? If you are listed above, watch out. The IRS is watching you more closely than others. But even if your are not a doctor, hairdresser, lawyer or accountant, you are not safe. If you commit Tax Fraud, it's only a matter of time before the IRS finds you. Watch your back.