It’s July and it’s time to get to it – your taxes are due two weeks from today! If you still need to file, we are stretching your dollar with 4 mistakes last-minute filers tend to make that may make you a target for an audit.
First – rounding numbers! This is one of the easiest ways to stand out as round numbers may make it look like you’re guessing. Be sure to be as accurate as possible and report what you can down to the penny.
Next disproportionate deductions – you are entitled to claim a host of deductions. It’s when those substantially lower your tax burden and it maybe doesn’t make sense with your income level that you become a red flag.
Big donations is #3 – the IRS already looks closely at large charitable donations when it comes to reporting income. Remember that “Grouping” all of your donations together may be easier but it may get you more attention than you’re looking for.
And of course – under-reporting income. Remember – all of those forms you get that show your income, the W-2’s, the 1099s, even the forms showing interest earned. Remember those all go to the government too. Failure to report any of them is a discrepancy that will surely generate an audit down the road.
Remember even if someone else is filing them for you – always double-check their work. Make sure they’re not doing anything dishonest on your behalf and make sure you have the contact information for the person filing them for you. If you do get audited, you want to know you have someone reliable who can help you through the process.
To recap on the red flags that get you audited:
- Round numbers: Makes it look like you’re guessing. Be as accurate, to the penny, as possible
- Disproportionate deductions: Massive deductions substantially lower your tax burden
- Big donations: Beware of “Grouping” donations. The IRS already looks like big donations. List them individually
- Under-reporting income: Forms go to the IRS too. Failure to report generates a discrepancy