dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct dct

These common tax-filing mistakes can lead to an IRS audit

Two weeks from today, on April 15, the Internal Revenue Service will want its money.

Tax day is a stressful, frustrating day for most people, but that doesn’t hold a candle to those who are notified a little further down the line that their tax return has been selected for an IRS audit.

Here’s the good news: Audits are rare. The IRS audit rate dropped to just 0.38% of all returns in 2022. And the most common causes of an audit can be avoided if you take your time while assembling your return—even if that means you need to file for an extension.

Make sure you have all of your forms, especially your 1099 if you’re working a side gig.

And, as obvious as it sounds, don’t artificially inflate your deductions. The IRS will compare the deductions you take in comparison to those of taxpayers who have a similar profile as you. If they’re out of range, that could increase your chances of getting a note.

(Most audits are done via correspondence, though rarer in-person audits do still occur.)

You’ll also want to avoid simple mistakes that could result in the IRS flagging your return. Here are the most common ones, according to the IRS.

Filing too early. This goes back to the don’t rush mantra. Wait until you’re certain you’ve received all your tax reporting documents before you file.

Missing or inaccurate Social Security numbers. Double check these to avoid a headache.

Misspelled names. If the named don’t exactly match the information on your Social Security card, it could trigger an audit.

Inaccurate information. Be especially careful when writing the amounts of wages, dividends, bank interest, and other income.

Incorrect filing status. Don’t check “head of household” if you’re not. Not sure if you qualify for a status? Check with an accountant.

Math mistakes. Simple addition and subtraction can be less simple for some people. Always double check your math, or (even better) use tax-preparation software to do so.

Figuring credits or deductions. Figuring things like earned income tax credit, child and dependent care credit, and child tax credit can get confusing. This is another case where tax software can help.

Incorrect bank account numbers. Double check both the routing and account numbers.

Unsigned forms. If you don’t sign the return, it’s not valid. That goes for your spouse, too, in most cases.

Disreputable tax preparers. Don’t rely on someone who’s not a true tax professional. The IRS can help you find someone to prepare your tax return.

Subscribe to the CFO Daily newsletter to keep up with the trends, issues, and executives shaping corporate finance. Sign up for free.

Article Source

Leave a Comment