Understanding Common IRS Audit Triggers and How to Prepare?
Navigating the complexities of IRS audits can be daunting. Being aware of the common issues highlighted in these audits will help you prepare effectively, ensuring you meet compliance standards and avoid potential pitfalls. · Income Discrepancies One of the primary triggers for an IRS audit is a discrepancy between the income you report and the information the IRS has. This often involves unreported income. It's crucial to report all income sources, from wages and dividends to freelancing payments, on your tax returns. If the IRS notices mismatches, they may delve deeper into your financial records. · Excessive Deductions The IRS expects deductions to be in line with your income level. If your deductions are disproportionately high, it might raise a red flag. Ensure you have proper documentation for all deductions you claim, especially if they are for charitable contributions or home office expenses. Keep receipts, logs, and detailed records to substantiate