The IRS audits only about 1% of all individual tax returns annually. The agency doesn’t have enough personnel and resources to examine each and every tax return filed during a year. So the odds are pretty low that your return will be picked for an audit. And of course, the only reason filers should worry about an audit is if they are cheating on their taxes.
- Failure to report all your income.
- Claiming the home buyer credit – 100% of these returns are reviewed.
- Large charitable deductions compared to your income, especially if they are non-cash contributions
- Home office deduction
- Business meals and entertainment
- Claiming 100% business use of a vehicle
- Consistent losses on a businesses
- Your business has a high use of cash
- Foreign bank account
- Numerous large cash transactions (near or over $10,000)
- Math errors
- Deductions are larger than average taxpayers
Dawn Pettiglio, CPA, from Bradford, New Hampshire. firstname.lastname@example.org