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—Why am I going to have an Audit?

Posted by Admin Posted on Sept 23 2018

why am i going to have audit

 

RED FLAGS

According to the IRS, returns are chosen for examination by computer scoring, information received from third party documentation (W-2, 1099 questionable treatment of an item), information received from other sources on potential non compliance (newspapers, public records and individuals). 

A computer program called the Discriminant Inventory Function System (DIF) assigns a numeric score to each individual and some corporate tax returns after they have been processed. If your return is selected because of a high score under the DIF system, the potential is high that an examination of your return will result in a change to your income tax liability.

Your return may also be selected for examination on the basis of information received from third-party documentation, such as Forms 1099 and W-2, that do not match the information reported on your return.

AUDIT TRIGGERS

  • Not Reporting all Taxable Income
  • Data Entry Errors
  • Participation in a Tax Shelter
  • Rental Losses
  • Failure to properly pay household help
  • Large travel and entertainment expense
  • Discrepancy Between Individual Taxpayers and Corporation Filings Associated to Taxpayer
  • Self Employed (not reporting profit in 3 out of 5 years)
  • Large charitable contributions
  • Home office deductions
  • Not Hiring a Reputable Tax Preparer
  • Claiming 100% business use of a vehicle

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

 

The information provided on the LBCPA Blog is a community service for general information purposes only, and should not be used as a substitute for consultation with professional advisors who specialize in the topics covered. Please refer to your advisors for specific advice on these subjects. The information is not intended to be used, and it cannot be used, for the purposes of avoiding U.S. Federal and/or State tax laws or the tax laws of any foreign jurisdiction.

These blogs contain general information only and Lord Breakspeare Callaghan LLC or any of the other companies or firms presenting information are not providing accounting, business, financial, investment, legal, tax, or other professional advice or services. Lord Breakspeare Callaghan LLC or any of the other companies or firms contributing with articles shall not be responsible for any loss sustained by any person who relies on this information.

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