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How can you avoid an audit this tax season?

On Behalf of | Jan 20, 2023 | Tax Controversies |

Most taxpayers will go their entire life without having to worry about an audit from the IRS. However, it is important to avoid doing anything that an IRS agent may flag as suspicious regardless.

Keep the chances of an audit low by understanding what they might look at as a red flag, and then avoiding these things.

Illegitimate expenses

NerdWallet discusses different reasons that the IRS may launch an audit. First, deductions for home offices. More people work from home than ever before. However, the IRS made it clear that any employee receiving a W-2 tax form or paycheck does not count as eligible for a home office tax deduction even if they work from home.

Next, illegitimate office expenses may trigger an audit. Some items count as “common and accepted” by the IRS, such as fuel for running a delivery service. However, a person cannot simply deduct the cost of fuel as a means to get to and from work.

Abnormal donations

They will also keep an eye out for abnormal amounts of charitable deductions. Have the receipts to back up any claims made because this is a common method of tax fraud and the IRS will likely want to check up on any enormous or frequent amount of charitable donations made.

Rounding numbers too generously

Finally, do not go overboard with rounding. Rounding to the nearest dollar is possible, but attempting to round to the nearest hundred or even ten could open up the possibility for investigation.

By taking these steps, it is possible to reduce the chance of an IRS audit this tax season.