Doing your taxes is no fun, but getting audited is even worse.
No one knows for sure how the IRS selects returns for audit, but here are some things to avoid.
- Wrong preparer - If the IRS believes your accountant is claiming fake deductions, they could audit all of their clients.
- Calling something a business and deducting losses, when it's actually a hobby, so it is not eligible for deductions.
- Taking deductions for things like charitable contributions that are large, relative to your income.
The bottom line? Take every deduction that you're entitled to, red flag or not. But if you're in a gray area, just document everything the best you possibly can.
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