Check out the other audit risks
Income Risk Large Itemized Deductions Unreported Income
Rental Income Self-Employment Home Office
Unreported Alimony Automobile Expenses
High-Risk Tax Audit Areas Related to Large Amounts of Itemized Tax Deductions
High DIF
IRS computers compare all tax returns to the national Discriminate Information Function (DIF) system average. The IRS calculates the DIF score by using a closely-guarded formula. Tax returns with the highest DIF scores are scrutinized by experienced IRS examining officers who determine which tax returns provide the best chance for collecting additional taxes, interest, and tax penalties.
If your itemized deductions exceed a target range set by the IRS, this will increase your chance of an audit. You should of course take the deductions that you are entitled to, but beware that if they exceed the averages for your income level, this will increase chances for an audit
Defend Yourself!
You are entitled to take every tax deduction that you qualify for and you should never be scared by the potential of an IRS tax audit. You must use common sense when making decisions about deductions and hire a qualified CPA to help you through the minefield of taxes
One Response
Excellent post. A lot of people will kowtow to the IRS for understandable reasons of intimidation, but it’s important to stand up for yourself when you’ve taken entitled-to deductions. Good software will help you along that avenue as well. No need to figure it out alone.