Here are the top reasons why the IRS elects to audit you.
- Failure to disclose offshore bank accounts and assets. The days of hiding bank accounts overseas are rapidly coming to an end. The IRS and many other countries around the world are focused on ending this tactic.
- Make lots of money. The IRS like to fish where the fish are. The more money you make, the higher your odds of getting audited.
- Claim charitable donations above the norm. Typically, the average taxpayer makes charitable donations of 3%. Going well above this average will raise your probability of getting audited.
- Failure to report income. With computers, the IRS has become very adept at matching W-2s, 1099s, and brokerage account reports.
- Operate your business at a loss year in and year out. If you have an expensive hobby (e.g., horse breeding, car racing), the IRS will want a closer peak.
- Reporting too many losses/expenses on a Schedule C (e.g., excessive entertainment expenses unrelated to business).
- Hire a lousy tax preparer. If your tax preparer has a lousy track record, the IRS may elect to review all of the returns filed by that preparer.
- Claim deductions with nice, neat, round numbers.
- Alienate someone (e.g., divorce, anger business partner, etc.).
- Failure to file on time.
- Claiming large losses on rental properties.
- Alimony deductions. The IRS will look at your former spouses return to see if the alimony deductions match.
- Operating a cash oriented small business.
If you’d like to minimize your taxes legally and lower the risk of being audited, call 305-231-2150 and ask for Andrew Brody, Managing Partner at Canner Brody and Yan CPA’s.