6 Things that can Trigger a Tax Audit

No one likes the thought of being audited. Even if they’ve been honest in their reporting, being audited can be stressful and harrowing. And, while tax audits are sometimes performed at random, they are, more commonly, performed because of certain “red flags.” The IRS, in other words, looks for certain markers or actions and, if it finds them, may decide to perform an audit. While there’s no foolproof way to 100% avoid being audited, you can greatly reduce your chances of being one of the unlucky few by knowing (and avoiding!) the common audit triggers.   

Not Reporting All Income

If you’re not carefully reporting ALL of your income from ALL sources, then you’re basically asking for an audit. The IRS knows every employer who has filed a W-2 or a 1099 on you, so when you file and conveniently leave out some sources of income, that’s a definite red flag for the IRS. Make sure you are thoroughly reporting your income in its entirety; otherwise, you’ll have a lot of explaining to do when the IRS comes calling!

Big Deductions

Making very big deductions is another way to raise a red flag for the IRS. Whether or not deductions are considered “big” is based on how it relates to your income, but if you’re trying to deduct half of your income or more, you’re probably going to garner some unwanted attention with the IRS.  If you’re reporting accurately (and you should always report accurately!), be prepared to explain yourself.

You’re also more likely to get audited if you’re claiming a lot of business expenses. Obviously, you should only claim truly legitimate business expenses, and make sure that you keep all receipts as proof of these expenses. That way, if you do get audited, you’ll have proof working in your favor.

Business Losses

 If you own a business that’s hit a rough spot, you may have to report business losses on your taxes. If those losses are large, though, there’s a good chance you’re going to be audited. As is the case with all things tax-related, have proof on hand to back you up and keep you out of trouble with the IRS.

Bad Math

Finally, having simple errors on your tax forms can, unfortunately, make you a likely candidate for an audit. Little things like faulty addition or a wrongly placed decimal point can make the IRS curious and cause them to do some investigating in the form of an audit! Since everyone is capable of making mistakes, it’s best to either use software that (correctly!) does the math for you or to hire a professional accountant who can avoid errors.

If you can follow these simple tips, you can hopefully avoid an audit, and, if one does happen, at least you’ll be prepared for it! 

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Craven County is “Clean”

While most counties around the United States dread their annual tax audit, Craven County, located in North Carolina, is a rare exception. The County’s government passed its audit for the 2012 through 2013 fiscal year with flying colors. It was pronounced completely “clean” by the auditing firm that conducted the audit, McGladrey, LLP.

A “clean” result from an audit is the best result an organization can hope for. It shows that the organization is doing everything it’s supposed to be doing financially speaking and that there is no “funny business” going on anywhere within the organization. For organizations that have customers, clients, or investors, a “clean” audit is particularly important, since it shows that the company can be trusted to handle money legitimately.

If you need to have a clean tax audit this year, then why not get some help preparing for that audit and making sure everything within your organization’s financial structure is as it should be? You can get the help you need by contacting Susan S. Lewis Ltd. of Naperville.

Tax Audit Reveals Taxpayers are Vulnerable to Fraud

When you think of the Internal Revenue Service or the IRS, you likely think of it as the organization that is in control of taxes, but like every other person and organization in the world, the IRS is also subject to tax laws—the very laws it helps to enforce—and even to the dreaded tax audit process. And while you might believe that the IRS would come out squeaky clean in a tax audit, its most recent audit revealed that it has left American taxpayers vulnerable to identity fraud due to problems with its security.

Surprisingly, this isn’t the first time flaws have been discovered within the IRS’ structure either. No, lapses in security were discovered in the past and corrective measures to fix these problems were ordered. Unfortunately, however, Russell George, who serves as the Treasury Department’s inspector general, recently revealed that only 42% of those corrections have been made and that taxpayers are still vulnerable.

While you can’t control how safe the IRS is or how securely it handles your sensitive information, you can control who you share your information with now and how your taxes are handled. Obviously, since you have some control, you’ll want to exercise it in a way that benefits you, by choosing the absolute best and most secure tax service you can; in Naperville, that tax service is Susan S. Lewis, Ltd.

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Failure to Pay Property Taxes May Lead to Audit

Currently, in the United States, there are literally thousands of people who have not yet filed their taxes. While, in the past, these people may have been able to get away with missing the tax filing deadline, this year, they are being warned that they could face a revenue tax audit if they don’t pay property taxes on time.

Those not paying their property taxes are scheduled to be labeled as “non tax compliant,” regardless of whether or not they file a tax return. In fact, even if all other taxes are paid, those who skip out on the property tax will still face this unwanted distinction.

There are around 600,000 people who will need to file their taxes by the end of October 2013—mainly the self-employed. Online filers, regardless of employment status, have a little more leeway in terms of paying property taxes; they are given until November 14, 2013 to get their taxes paid. Despite the impending deadline, around 159,000 homeowners still have yet to pay their property taxes.

If you’re concerned about paying your property tax and would like to avoid a tax audit and possible other consequences, be sure to contact Susan S. Lewis, Ltd. of Naperville.

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Tesla Does Well in the Stock Market

For a while now, car manufacturer Tesla has been regarded as a sort of “underdog” of the stock market. That’s been changing recently, however. A recent tax audit of the car maker reveals that it’s doing better than ever before. This increase in productivity is due in large part to Tesla’s efforts, which include luring the richest possible investor and sell shares rapidly as prices rose.

Tesla certainly has a lot to be proud of. It has worked hard to improve since its last tax audit, and improve it has! The company actually reached its highest value ever—$183 per share—on September 20, 2013. Due in large part to these improvements, Tesla’s current market value is well over $22 billion, and the company is reported to have sold an impressive 1.29 vehicles in the United States and 400,000 more in China.

Would you like to see your company make the same kind of improvements as Tesla has? If so, then visit Susan S. Lewis, Ltd. in Naperville for help and advice. #TaxAuditNaperville

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