2 Ways to Trigger An Audit

Photo: Mconnors
Photo: Mconnors

2 Types Of Errors That Will Attract The IRS’s Attention

Nothing is more stressful to a taxpayer than an audit notice. Filing the return on time was stressful enough, and now the IRS has set their lazer focus on your return. Before you freak out, there are two factors that may have contributed to that audit notice, and both of them are easy to fix.

Missing Information

If your social security number, date of birth, signature or other key pieces of information are missing from your return, that will draw attention to your return.

Double and triple-check your return.  DIY tax prep software has warnings encoded that prohibit you from moving onto the next screen if information is missing. If it’s your first time using that tax prep software or your first time filing a return, make sure you have your social security card handy if you haven’t memorized your social security number.

Likewise, if you file a paper return for any reason, check it over to make sure you have provided all the complete and correct information.

Taking a few extra minutes to check your return could save you the headache of receiving an audit notice. Even if a tax pro files your return, read it over to make sure all information is accurate.

In fact, if your tax pro doesn’t ask you to review your return, ask to see it. Tax pros are human and can accidentally transpose digits on a social security number or birth date, so be sure to look over your return carefully.

Income Discrepancies

Your employer reports your earnings to the IRS, as does your client if you are an independent contractor who earns over $600.00 from that client. Once the IRS receives your return, they compare the information you provided with the information provided to them from your employer(s) and/or client(s). If the IRS suspects that you are deliberately under-reporting your income, that may be enough for them to send out that audit notice.

When filing your return, make sure you or your tax pro have all of your current income documentation (W2, 1099 Misc. forms, etc.) at the time you prepare your return. Double and triple-check the income figures. Generally, the IRS will want to audit people who they see as most likely to under-report income: wealthy folks who may have offshore accounts and self-employed folks.

What To Do If You Discover Errors on Your Return

Your tax return is filed on time. Whew!  An e-filed return with missing or incorrect information will be rejected and sent back to the tax prep office, but if you choose not to e-file, and realized there are some errors on your return, here is what you can do:

  • First, don’t panic. It happens to the best of us. Instead, file an amended return with the missing or correct information included. Catching errors before the IRS does can save you the headache of filing an amended return after the fact and any possible delays on any refunds.
  • If the thought of filing an amended return is intimidating, have a tax prep pro file it for you. That will eliminate the guesswork and the stress of filing an amended return. It’s also a good idea to have your return filed professionally if you have a complex return (itemized deductions, rental properties, investments and other transactions).

Although audits may be unavoidable, you can reduce your risk of being audited by filing an accurate return and by providing complete and correct information, including income. The IRS isn’t out to “get” you, but it does give extra scrutiny to returns that are incomplete or inaccurate.

If you are facing any kind of tax dilemma–from incorrect returns to back taxes–we have tax pros on staff who can help you. Just give us a call at (888) 224-3004 or click the white “Start Chat” button in the upper right-hand corner of any of our webpages.

Don’t go it alone. We’re here to help.

 

 

 

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