IRS Audit Red Flags: How Does The IRS Catch Unreported Income?
The IRS collects tax returns from millions upon millions of American taxpayers each year. To efficiently determine which tax returns to audit they use several sophisticated software tools. How the software calculates which tax returns to audit (by using IRS audit red flags) isn’t disclosed by the IRS, but most tax professionals understand which factors will most likely lead to a tax audit.
It’s important to note that red flags don’t necessarily lead to an audit.
What Will Happen If You Underreport Income On Your Tax Return? Is Underreporting Income A Crime?
5 General IRS Audit Red Flags
1. High Salary
2. Charitable Donations
3. Incomplete Information
4. Differences In Reports
5. Job Expense Deductions
How Does The IRS Catch Unreported Income?
How To Avoid Being Audited By The IRS
- Ensure all math is correct: Math errors increase your chances of being audited.
- Complete all documents: When you submit your return, make sure all documents are attached and have your signature.