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Common tax mistakes that increase the risk of an audit

| Mar 21, 2018 | audits

Most Maryland taxpayers dread the thought of getting audited by the Internal Revenue Service. While the risk of being audited is relatively low, experts say there are a few innocent errors that could increase a person’s chance of landing in the audit pile.

For example, people who rush through their taxes are more likely to be audited. Waiting until the last minute could leave a taxpayer without important financial documents or force them to hurry through calculations. This could lead to an incorrect tax return and an audit. Therefore, taxpayers should be sure to give themselves ample time to correctly prepare their returns. Another quick way to get audited is by filing a tax return on paper. According to the IRS, 21 percent of paper returns contain errors while only 1 percent of electronic returns have mistakes.

Another way for taxpayers to invite IRS scrutiny is to guess at numbers. Experts say people should always use hard numbers when preparing their tax returns and never put down estimates. The IRS can electronically verify numbers through 1099s and W-2s. If a taxpayer’s numbers don’t add up, they may get flagged for an audit.

Finally, experts advise that people be careful when claiming deductions. Taxpayers should take advantage of all deductions they are owed, but they should list them accurately and be able to fully document them. For example, if someone’s deductions for medical expenses come to $2,494, they shouldn’t round the number to $2,500. Rounded numbers could look like a guess to the IRS and warrant closer examination.

Individuals facing tax audits may benefit by partnering with a lawyer as soon as possible. An attorney could contact the IRS on a client’s behalf and work to obtain a favorable resolution.