Tag: Finance

What mistakes will make the IRS audit you?

What mistakes will make the IRS audit you?

IRS stands for Internal Revenue Service, and the IRS audit is a type of examination conducted by the IRS to ensure that a person is following all the tax rules and paying the right amount of taxes.

Usually, people hide certain incomes and expenses to lower the amount of tax payable, and the IRS conducts an audit to find out such incomes and tax gaps.

There are specific reasons that invite IRS to conduct an audit on your or your business. If you know about these causes, then you can easily avoid an IRS audit and stay away from legal problems.

Mathematical mistakes

  • One of the most common reasons that make the IRS audit someone is math errors in the statements.
  • Sometimes, people write wrong numbers or omit any one of them, which makes the balance sheet mismatch.
  • It is the primary reason that attracts the attention of the IRS makes them audit you.
  • So, you must be careful with the numbers during your tax preparation.

Missing to mention any income

  • Usually, a person has more than one source of income, and he needs to mention all of them in the accounts.
  • In case you fail to mention any of your income sources, then you have to face an IRS audit.
  • You should not hide any income, as at some point, it will be revealed and will make IRS conduct an audit on you.

Reporting unnecessary business expenses for deduction

  • Expenses get deducted from your income and lower the amount of tax payable.
  • So, some people deduct unnecessary expenses to save some tax.
  • If the expense is not necessary and is not related to your business, then it can cause you some tax issues.
  • Mentioning too many expenses in deduction is also a primary reason for the IRS auditing people.

To conclude, there are some common causes for an IRS audit, and if you know about them, you can avoid facing it.

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