As you gather your information for your 2009 tax return, there are a few things to look out for that the IRS may take a close look at and potentially trigger an audit. In actuality, the percentage of taxpayers who will face an audit is fairly small compared to the number of tax returns filed. However, some taxpayers are more likely than others to face an audit based on the information provided on their tax return. While audits can be done for a number of reasons, often the IRS will take a closer look if the following applies:
- Higher incomes.
- Income other than basic wages, for example, contract payments.
- Unreported income, such as investment returns.
- Home-based businesses, especially when in addition to salary income and home-office deductions.
- Non-cash charitable deductions.
- Large business meal and entertainment deductions.
- Excessive business auto usage.
- Losses from an activity that could be viewed as a hobby rather than a business.
- Large casualty losses.
No one wants to get the dreaded IRS letter stating, “Dear Taxpayer, Some of the information that you provided to us does not agree with information we received from other sources.” Always keep in mind that is critical to maintain proper documentation, receipts and records for anything that affects your tax return. At HLB Gross Collins, P.C. we are committed to helping clients get every deduction to which they are entitled and minimize the tax bite.