Red flags that may trigger an IRS auditPosted: Updated:
PHOENIX -- Filing your taxes with the Internal Revenue Service is pretty much an annual tradition for most workers.
But when you file, according to Kiplinger, there are some things that increase your chances of being audited.
For example, making too much money can trigger an audit If your income is over $200,000, then your chances for an audit increase from just one percent to four percent. That means one out of every 25 tax returns will be flagged for an audit.
Failing to report all income also raises eyebrows with the agency.
Don't forget, IRS computers are really good at matching numbers from all sources.
Another red flag is a large charitable deduction. IRS computers know the average donation to income ratio.
Home office deductions, like it or not, could also trigger an audit.
The IRS is legendary for knocking down home office claims, so be careful with that one.
Rental losses frequently trigger an audit. There are a lot of hurdles to jump through to obtain this write off, so make sure you talk to a tax pro.
Business meals, travel and entertainment deductions are a goldmine for IRS auditors. A large write off in this category will set off alarms with the agency.
Finally, higher than average deductions raises suspicion. If you have a lot of deductions, that’s fine. Just make sure you have documentation to prove it. But, if your deductions are disproportionate to your income and you have nothing to prove it, watch out.