A taxpayer is liable to pay taxes in a timely period to the government. For that, one must keep the records in a proper order to avoid any discrepancies and maintain the accuracy. For example, in a general case, people whose income is above $10 million are the ones who go for audit review on a frequent basis.
However, in some cases, it can be random, and an individual may become subject to an audit notice which is there for a review. Therefore, for an individual, it’s better to know the cases where a person might get an audit notice if they go for a few of the cases that are considered as a red flag by the IRS. An IRS audit lawyer is someone who can make the client aware of such scenarios and will help them avoid such mistakes.
In this blog, we will look into some of the red flags that one must avoid so that one can maneuver an audit notice and keep the tax process simple and effective without any errors.
1.Keeping Exorbitant Amounts in Charitable Contributions
Here, a person gets encouraged by the IRS who do charitable work and donate some amount consistently to the less privileged. One of the main aspects of the person who is making a charitable contribution is that they will take a deduction of the amount which they are donating.
If a person is donating the majority chunk of their income to charity, in that case, it raises a few eyebrows, and that can lead to an audit notice where the charitable account will be looked after, and a person might need to give an analysis of the spending.
2.Persisting a Math Error
Though this case might sound silly, it’s the most common type of mistake that people make while filing for taxes. Here, an individual needs to stay aware of any discrepancies. For that, they need to make a case where, beforehand, only the taxpayer will let the auditors know about the math error and will submit the supporting file.
To avoid errors, a person must review the files before submitting and ensure that the numbers are properly placed or not, and must check whether it’s properly calculated.
3.Under-Reporting the Income
Another mistake that many individuals make is under-reporting the mistakes, and that includes providing a much lower number to the IRS and thus raises the red flag in the tax file. To reduce the taxes, there are a number of ways to get deductions and ask for credits, but lowering the income is not one of them.
Here, a tax attorney from Newport Beach or another location can help the client, which allows them to revert their old tax papers and file the new ones with proper income in the file. Here, the taxpayer needs to fill out the form 1099 or W-2, which are the two documents that work as proof of income statement.
These are the most common red flags that people unnecessarily bring in their tax files and can trigger an audit from the IRS.
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