A tax audit is not always an indication that you’ve done something wrong or deliberately cheated on your tax forms. Misconceptions surround IRS audits. For this reason, it is crucial to have a good understanding of your specific case.
Taxpayers will try their best to prevent their chances of getting audited. However, this is still a significant stress factor that anyone can experience at any time during the tax season. Even though an audit is not a fun situation, it does not have to be a terrifying experience.
This article details IRS audit triggers and how you can avoid them.
1. Math Errors Will Trigger an IRS Tax Audit
It is shocking for a taxpayer to receive an IRS notice in the mail. Keep in mind that audits are common and can be rectified. Every year, millions of taxpayers receive audits due to math errors.
Use a smart approach to resolve this issue. Be sure to check for discrepancies on your tax return document. Look through all the math calculations to make sure the problems are fixed.
Mathematical calculations on tax documents are unavoidable. Therefore, you don’t have to panic or fear the wrath of the IRS. Even the most seasoned taxpayers make minor math errors on tax documents.
A tax document is automatically flagged if math calculations are not precise. Depending on the issue, a tax audit can become a stressful and time-consuming experience.
In this regard, it is critical to get advice and guidance from experts. Tax resolution services are essential because they provide a customized solution. Choose a tax service to help you successfully navigate your tax problems.
These professionals will thoroughly analyze your tax documents. They will determine mathematical errors and guide you through the IRS audit process. Their goal is to minimize your stress, utilizing the right steps to improve your tax problems.
2. Home Office Deductions
Is a part of your home reserved for business purposes? Taxpayers should take the smart action of making tax deductions. These deductions help you to save big money during the tax season.
One common advantage of operating a home-based business is that you’re entitled to home office deductions. This is a good tax benefit for small business owners. You have the option to pay fewer taxes from the expenses used from your home office space.
All you need to do is follow all the IRS tax requirements. To qualify for a deduction, there are two basic requirements. According to IRS, your home office space must be your principal place of business and designated for regular use.
As a business owner, you can write off home utilities, real estate taxes, general home repairs, and other related business expenses. These deductions are available for any space in your home that is exclusively used for business use. Even if you’re a renter, you can still qualify for a home office deduction.
Make sure that your deductions are accurately applied and have receipts to confirm your business expenses.
Despite this benefit, business owners are reluctant to include these deductions due to the fear of triggering an audit. Do not make a tax deduction if you’re confused. You must have a good understanding of IRS tax laws to make these deductions.
No matter what type of deductions you include, you should be careful and confident that you’re not breaking any tax laws. Since tax deductions from a home office space are strongly scrutinized, you can consult with a tax professional. These advisors are well versed in all aspects of filing taxes and will help you prepare your taxes.
3. Excessive Charitable Donations
How do you get audited entering deductions from charitable donations? This is a common question that taxpayers have in mind when preparing tax returns.
Making donations to charities you’re passionate about is a thoughtful gesture. This also gives you the benefit to reduce your tax expenses.
What can you deduct on your tax form? These tax deductions may consist of your contribution to educational organizations, religious organizations, schools, and nonprofit hospitals. By searching the IRS website, you will know if your organization qualifies for a deduction.
Taxpayers are in the habit of donating to all types of charities. During tax season, these donations and deductions should be made without breaking tax rules.
Before making a tax deduction that relates to your charitable giving, you must abide by tax rules. One rule to keep in mind is to stay within the limit range of tax donations. Some taxpayers tend to make unrealistic deductions that trigger IRS red flags.
Remember to keep receipts for all donations you make. If IRS flags your tax return, you will have proof of your contributions. These donations should be specific, honest, and not a large percent of your income.
Generally, the charitable deductions you make can only equal up to 50% to 60% of your adjusted gross income. Keep in mind that you may get an IRS notification if your donations are high in comparison to your income.
If you have made donations that are considerably larger than usual, be sure to submit this documentation as proof.
Resolve your Tax Issues
You should never prepare your own taxes if you’re confused by the guidelines. Tax laws are challenging and change from year to year. That is why you should use the reliable services of a tax professional to avoid a tax audit.
You will be updated with the latest tax laws, procedures, and practices to prepare your tax documentation.
If you’re concerned about getting an audit, there are critical steps that you can follow. Tax experts will help you to manage your finances safely. This is a significant step that allows taxpayers to avoid tax audits and future problems.
Go ahead and contact these professionals if you’re confused or have questions.
To get more information about common IRS audit triggers and learn if you’re at high risk, contact us today. You’re likely to obtain a good tax resolution that is beneficial for your needs.