Mistakes can increase risk of audit

The Internal Revenue Service has long reassured taxpayers that the vast majority of them have a slim chance of ever experiencing an audit during any given filing time, especially if their income is not particularly high.

However, there are always certain exceptions to such trends, especially when taxpayers make mistakes that can end up being considered red flags.

For example, a recent article by Investopedia.com laid out some of the risk factors that could raise a taxpayer's chance of being audited.

Among them are overestimating the value of non-cash charitable donations like old cars, clothing and food. Typically, the Web site suggests that people should value such items at between 1 and 30 percent of their original purchase price, and in cases where an item is valued at above $5,000, a letter from an appraiser is required.

Other tips include being careful to avoid any math errors, remembering to sign the return, being sure to report all income from all sources, and avoiding excessive home office deductions.

With these things in mind, the importance of submitting the most accurate return possible is one more reason to consult with a professional tax preparer this filing season.

Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.
Posted To: Tax Ranger's Blog By: Tax Ranger On: Thursday, February 11, 2010
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