Things that might trigger an IRS auditPosted: Updated:
PHOENIX – Accounting experts say there is about a 2 percent chance you will be audited by the Internal Revenue Service.
While that doesn't sound like a high percentage, there are things that certainly raise red flags with the IRS.
For example, if you own a home then you probably already know you can deduct your mortgage interest. However, mortgage interest over $50,000 might trigger an audit.
Remember, you have the right to deduct the interest and it will most likely occur on luxury homes, but anything over $50,000 gets their attention.
Large donations to charity raise eyebrows too - especially for non-cash items. You may be a giving person and donated a ton of items to charity but you need to have documentation.
Rental property with significant losses also gets the IRS's attention. Another audit trigger is home office deductions. Years ago, the IRS scrutinized this category pretty closely but experts say these days they've gotten a little better although they still eyeball it.
Finally, large deductions compared to your income. If you're writing off a significant amount for business travel or entertainment, it will get the attention of an auditor.
Experts will tell you that you want to be aggressive and make sure you take advantage of every tax break available but make sure you have proper documentation for all of your numbers just in case Uncle Sam comes calling.