8 Ways to Attract an IRS Audit

  1. Math Errors: Take the time to make sure your calculations are correct all the way throughout your return. One thing IRS computers can do is add and subtract and too many math errors can indicate a sloppy return.
  2. Unreported Income: IRS computers match the various varieties of report income such as Form 1099s issued for dividends, interest and the like with what’s shown on your return. A mismatch, even a small one, can trigger a further scrutiny.
  3. Deduct Your Baseball Card Collection: The IRS keeps a close watch on hobby losses and efforts by taxpayers to subsidize their recreational activity by calling it a business and claiming a loss on Schedule C (Profit or Loss From Business).
  4. Use Round Numbers: To the IRS, $1,966.74 looks a lot more real than $2,000.00.  This is especially true on Schedule A (Itemized Deductions), where the IRS gets little third-party paper verification.
  5. Discrepancies Between State and Federal Returns: Be sure that your information matches on both your state and Federal returns. This is another example of how sloppiness can hurt you.
  6. Don’t Report Offshore Money: The U.S. is finally getting solid information on the accounts of U.S. taxpayers in notorious tax-avoidance havens like Switzerland.
  7. Brag: The IRS is now paying good money to informants for tips leading to large amounts of unpaid taxes. Keep it to yourself. Divorces and disgruntled employees provide the IRS with lots of juicy leads.
  8. Make Tax Protester Claims: This is a huge red flag to the IRS. However, each year filers still mail in tax returns showing nothing owed, claiming the income tax is unconstitutional, or Federal Reserve notes are not money.

Disclaimer: Hone Maxwell LLP articles and blogs are not intended as legal advice. Additional facts, facts specific to your situation or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information herein.

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