Audit trials by IRS turn out to be the biggest nightmare for professionals and business owners. After successfully paying the tax, one tends to relax but one should be careful while paying their taxes because if IRS senses something fishy, one has to face an audit trial likely.
Even If you pay your taxes on time and honestly, there is a possibility of facing a trial since we are humans and we commit some mistakes for sure. These unwanted mistakes are best handled by a tax preparation services company. So, it is always advisable to take professional help for the same. Let’s see what all tax filing return mistakes have the chance of leading you to an audit trial in 2017.
5 Likely to be Audit Trial Candidates
Making Huge Money
We all aim to earn more and more and there is nothing wrong in that. If you have been lucky enough to make huge amounts of money, you should be proud of yourself. However, you should be mentally prepared to face the audit trial and the reason is simple. When you make lots of money, you are always under the radar of IRS. Having said that, you need not fear for the same if you are filing your return explaining each and everything in detail!
Anyone can commit a mistake while filing his/her tax return. You may forget to include something important or include something which may put you in trouble. No matter, how big or small mistake you commit while filing the return, any mistake may end up in making you face the audit trial. If there is even a single element of the tax return which you can’t understand, you have the option of taking help from a tax preparation services company for the same.
Not Mentioning Your Entire Income
It is not advisable at all to hide any of your income from the tax department as one can always get penalized for the same. The copy of W-2 AND 1099 forms is received by taxpayer detailing all his/her income for the previous year and even IRS receives the same information. If you fail to list any of the income which is listed on these two forms, the IRS computer will flag your return for sure, eventually leading you to a trial.
Too Much Charitable Donation Claim
It is always good to donate money to charity and it is well appreciated by society and even the government. It is very normal to do so and one should not worry at all if everything is done in a limit. However, when your charitable donation exceeds 3% of your total income, chances of getting your return flagged are high for sure. The key here is to donate to those nonprofit organizations which can give you a receipt for the same. Also, include ‘form 8283’ for all the items having a value of more than $500.
Small Cash Business Enterprises
If you run a small business and deal in only cash or mostly cash transactions, you are likely to face the audit trial. It is very difficult to maintain records for each and every cash transaction and this is the reason, such types of business face a lot of trails every year. One should hire a tax preparation services company if one is finding difficult to deal with the record keeping.