YES, definitely. Mistakes can get you audited by the IRS. Let’s discuss common mistakes that can get you into trouble.
1. Filing On Paper
Paper-filed error rate is 21% compared to only 1% for e-filed tax returns.
2. Procrastination:
Some people have a habit of waiting and waiting until April 15 to file…an extension. Rushing is a perfect reason to estimate numbers, an ideal situation to omit key data, a perfect storm for errors.
3. Guessing Numbers:
Guessing deductions is dangerous. The IRS expects accurate numbers – numbers that match W-2s and 1099s. If you did freelance work but are missing a form 1099, don’t guess. Call the issuer and get a copy of that 1099. If they give you a run around, call again and insist on a copy. It’s important. The company sent a copy to IRS. If you don’t report the exact amount, you will get a notice. Guaranteed.
4. Using Round Numbers:
You spend around $870 for an item and round it up to $1,000. You spend $490 for another item which you round up to $500. How does a return with round numbers appear to an IRS agent? Let me tell you – it speaks of a taxpayer who is not thorough and does not keep receipts – an ideal catch for an audit.
5. Using Disproportionately High Deductions
Deducting $8,000 in charitable contributions on a $60,000 income looks suspicious. It’s probably legitimate, so be sure to have documentation to back it up. And don’t use round solid numbers for reasons described above.
6. Failing to report All Taxable Income
A missing W-2 or 1099 invites a notice from IRS matching program. It will be caught 100%.
7. Committing Math Errors:
Basic math errors raise suspicions about what else could be wrong on your return. Use tax software or online program to ensure that calculations are correct. Consider going to a tax professional.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.
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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies. He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at [email protected].
