You’ve got a 50% higher chance of audit if your income goes above $100,000. The IRS considers anything over $100,000 as ‘high wages.’ Add in one of the following 11 additional audit triggers and your chances go up substantially.
- Large number of itemized deductions (that exceed undisclosed IRS targeted amounts),
- Tax shelter investment losses,
- Complex investment or business expenses,
- Own or work in a business which receives cash,
- Business expenses are high in relationship to income,
- Rental expenses,
- Prior IRS audit resulted in tax due,
- Complex tax transactions without explanation,
- You are a partner or shareholder in an entity that is audited,
- You give large amounts of cash to charity, or
- Someone has informed on you to the IRS.
Over the next few days we’re going to look at ways you can substantially lower your chances of IRS audit.