What Actions Could Get You Audited by the IRS?

Tax Audit Miami

As tax season comes to an end, it’s important that you prepare the last of your documents and file them as soon as you’re able to. Before you file them, though, we recommend that you or a professional accountant look over them to make sure that everything is present and filled out properly. Verdeja, De Armas & Trujillo, LLC is available for you as your tax audit Miami professionals.

At Verdeja, De Armas & Trujillo, LLC, our priority during this time is to ensure that your taxes are filed without any unforeseen complications. One example of a complication would be if something unusual catches an IRS agent’s eye on your tax return that would call for an audit of your tax situation. We want to help you avoid that by providing you with seven potential audit triggers that could save you from a world of difficulty.

1. Filing an Incomplete Tax Return

Filing an incomplete tax return may make an IRS agent question why you didn’t disclose certain information on your tax return. Before filing your taxes, take the time to review all the documents and make sure everything has been filled out completely and correctly.

2. Reporting Large Amounts of Income

As far as taxpayers go, only a certain percentage is categorized into higher income tax brackets. These individuals are most likely to be audited by the IRS because they typically make over $200,000 a year. If you are not within this bracket, your tax return must show that you are earning a legitimate income from a small business, a W-2 job, or through investments or other interests.

3. Claiming Large Itemized Tax Deductions

In this instance, the IRS may take a second look if the agent determines that the deductions are a little high. An agent will come to this conclusion by comparing what others in your same income tax bracket are claiming on their return.

4. Incorrectly Claiming a Home Office Deduction

It is within a small business owner’s right to deduct home office expenses on their tax return, however if it’s not handled correctly it could lead to an audit by the IRS. To properly claim a home office deduction when filing your return, you must include the specific area of your residence and document all your home office expenses. You can go about this by writing off an appropriate percentage of your bills or you can claim a flat-rate deduction of $5 per square foot.

5. Improperly Deducting Meals and Entertainment

It is also within a small business owner’s right to write off 50% of business-related meals and entertainment activities as a tax deduction. In order for this claim not to raise a red flag, you must stick to the 50% write-off amount, record who was present at the gathering and what type of business was conducted or discussed and save all receipts.

6. Claiming False Deductions on Business Losses

One common occurrence that happens to some business owners is business losses. To accurately and properly deduct business losses you must qualify for it. Starting or maintaining a formally established business identity can meet this requirement. As a result, it helps prove to the IRS that the losses are connected to your business.

7. Failing to Report All Investment Income that You’ve Earned

The IRS needs to know about every type of taxable income you earn, whether it comes from interest, dividends or other kinds of investments.

At Verdeja, De Armas & Trujillo, LLC, our team of dedicated professionals in our tax department constantly remains abreast of the changing tax landscape, and we provide tax consulting and compliance services to individuals, corporations, S corporations, partnerships, limited liability companies, trusts and estates and non-profit entities.  Contact us today for a consultation.