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Avoid a Tax Audit: Discover the Red Flags on Your Tax Return

Tax Audit Red Flags

Personal Finance

Avoid a Tax Audit: Discover the Red Flags on Your Tax Return

Even though the IRS is facing another budget cut, it does not mean that American taxpayers will get away with trying to cheat the IRS. There are always red flags the IRS is looking out for, so if you wish to avoid a tax audit and fill in your taxes as accurately as possible, these are the red flags you should consider.

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Reporting Your Income

When you report your income to the IRS, it is important to report everything. If you have forgotten to report something, you are more likely to be subjected to a tax audit.

The wages Americans earn on the job are reported to the IRS with W-2 forms. Any interest, dividend or capital gain is reported on the 1099s form. Both forms are provided to you and the IRS, so if you skip information from any of these forms on your tax return, you could be getting a tax audit!

To ensure everyone reports their income accurately, the IRS uses a form-matching program; this means that discrepancies will show up if you have made an error on your report. The moral of the story? Don’t try to hold back on any of your income when making your report.

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