Reasons Why the IRS Might Audit You

Reasons Why the IRS Might Audit You

The Internal Revenue Service (IRS) may choose your tax returns for audit due to various reasons. The audit comprises a review or examination of your accounts and other financial information to ascertain their veracity.

In simple words, the IRS just wants to double-check that there are no discrepancies in your tax returns.

If you’re not intentionally cheating or evading taxes, you don’t need to worry.

Here are some possible reasons why the IRS might want to audit your accounts.

Mathematical errors

Filing taxes requires a keen eye. If you accidentally miss a zero or make any other typos when filing taxes, you may be fined by the IRS. There’s no room for error when you’re filing taxes; the IRS doesn’t care if you made a mistake intentionally or accidentally. If they find any discrepancies, you’ll be penalized.

 

That’s why hiring a specialist tax consultant is always recommended. This will significantly reduce the chances of making simple mathematical errors.

 

Failure to report an income

Many people have multiple sources of income. While you may think you can avoid taxes by not reporting a part of your income, it’s never a good idea. If the IRS finds out about your other taxable incomes that you didn’t mention when filing returns, they may run an audit and heavily penalize you.

Claiming fake charitable donations

While charitable donations offer you a tax break, i.e., they reduce your taxable income, itemizing too many donations can raise suspicions. If you report any false donations or gifts to reduce your taxable income, the IRS may find out and request an audit.

 a person filing their taxes

During the audit, you might get in trouble if you fail to produce sufficient documentation and evidence for all your charitable donations.

Deducting extra business expenses

While many business expenses can be deducted from your taxable income, it’s never a good idea to deduct irrelevant expenses. All your expenses must be “ordinary” and “necessary” for your business. For example, you can’t simply subtract personal expenses such as vacation costs from your business’s income. If the IRS officials find something suspicious, they might audit your tax returns.

 

If you’ve been notified by the IRS of a tax return audit, Nidhi Jain CPA can help you. The firm offers IRS representation and audit defense for both business and personal tax audits.

Nidhi Jain also offers tax planning services in San Francisco with certified public accountant in usa to help you with strategic tax solutions, business tax filing, bay area bookkeeping and accounting, and much more.

 

Call them or email them now to learn more about their accounting services.

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