Why the IRS could audit a tax return

If the IRS suspects that a Maryland taxpayer or anyone else isn't being honest on a tax return, the agency may initiate an audit. In 2016, 0.7 percent of all returns were selected for audit. In some cases, audits may be initiated on a random basis. There are seven common reasons why the IRS may want to further examine an individual's tax return. One of those reasons is a failure to report income earned on a freelance basis.

The government will receive a copy of Form 1099 that an individual receives from an individual or company during a given tax year. Those who are self-employed may also receive an audit for claiming a loss on a Schedule C. As a general rule, items should only be deducted if they are related to a business as opposed to being purely personal expenses.

Individuals who claim charitable deductions should have proof that they have made them. This is because taxpayers who claim large charitable deductions could be at a higher risk of an audit. When a taxpayer claims a deduction, the IRS may become suspicious if he or she rounds it up to a number that ends in zero. For instance, an item that cost $94.99 should be rounded up to $95 as opposed to $100. Of course, if an item really did cost $100, that should be what is recorded on a tax form.

If the IRS audits a taxpayer's return, that person may wish to rely on a tax attorney for assistance. A lawyer may be able to represent an individual during an audit. This may result in no change to a return or a refund to the person being audited. An attorney may also negotiate to have interest or penalties waived by the government.

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