Red flags that could trigger an audit

Completing your federal income taxes is a monumental event that brings a sigh of relief. However, any euphoria over the annual accomplishment quickly dissipates with a common nagging fear: an audit.

While there is no perfect recipe to avoid an audit, there are red flags that wave prominently with the IRS.

Filing a paper return

Mailing your tax return was once commonplace. With the advent of technology, specifically tax return software, hard copies are now under a much greater audit microscope. Often rife with math errors and illegible handwriting, you could find your return going through a more selective and thorough review.

Business and home-office deductions

Business expenses involve goods and services necessary to perform a job. However, citing excessive costs leading to losses on a Schedule C over several years could lead to your business being classified as a hobby. Additionally, when it comes to writing off space in your home for business purposes, claiming the largest room in your house as exclusive for operation could raise suspicion.

Charity vs. income

While charity begins at home, disproportionately high contributions compared to income could be the beginning of the audit process from a not-so-charitable IRS auditor. Regardless of how much you give, you need to have documentation of every contribution.

1099 oversights

Forgetting about nonwage income is not something the IRS will overlook In fact, failure to report income generated from freelance work, dividends or interest will be automatically reported to the IRS. Even the most innocent of oversights could lead to an audit.

Perfect numbers

Whole round numbers may make the math easier in a tax return. However, $100 here, $300 there, and other "perfect" amounts listed as deductions without documentation will not make life easier. The IRS will strive for its own perfection auditing you.

No Comments

Leave a comment
Comment Information

Contact Kundra and Associates Today

Please call our offices at 301-637-8130 or fill out the form below to arrange a confidential consultation.

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Email Our Attorneys

Rockville Office
110 North Washington Street
Suite 406
Rockville, MD 20850

Phone: 301-424-7585
Fax: 301-424-7047
Rockville Law Office Map

Washington, D.C. Office
1025 Connecticut Avenue NW
Suite 1000
Washington, DC 20036

Phone: 301-637-8130
Fax: 301-424-7047
Map & Directions

Mumbai, India
C/o Anmol Sekhir Consultants Pvt. Ltd.
Chartered Accountants
3rd Floor, Sahakar Bazar
Opposite Railway Station
Bandra (West), Mumbai, India 400-050

Phone: 301-637-8130
Map & Directions