Red Flags for a Tax Audit
What does the IRS consider red flags?
Depending on the information reported in your tax return, you have a higher likelihood of being selected for an IRS audit. There are certain red flags which are common to those returns the IRS chooses to review, as they indicate a greater chance of the return containing a tax audit deficiency. These red flags include:
- High income
- Unreported taxable income, including alimony
- Business operations or employment typically involving the regular receipt of cash
- Itemized deductions which are large in relation to your income or which vary significantly from the national average
- Substantial cash contributions to charities out of proportion to your income
- Complex investment expenses
- Tax shelter investment losses
- Rental expenses
- Home office tax deductions
- Automobile logs
- Complex tax transactions without explanations
You also face a higher chance of being audited if you are a partner or shareholder in an audited partnership or corporation, or if you had a previous IRS audit that resulted in a deficiency. It can also happen that information is given to the IRS regarding your taxes by a third party, in some cases an ex-spouse or ex-business partner, which prompts an audit. If you receive notification of an audit or have cause for concern regarding this possibility, a Miami tax attorney can offer legal advice and represent you through the audit process.
At the Law Office of A. Antonio Tomas, P.A., we consider no audit routine. Our founding attorney will personally address your case and give you the personalized attention you need. The firm will work relentlessly to protect you from the potential adverse effects of an audit, such as a large tax bill, fines or even a criminal investigation. Contact our Miami office if you have been selected for an audit or have reason to believe this may occur.