15
Common IRS Red Flags
1.
Math errors
2.
Returns that are filed without the necessary supporting tax return
schedules
3.
Unrealistic figures (such as frequent occurrence of rounded numbers)
4.
Major, not easily explainable, changes in comparison with prior
tax returns
5.
Certain occupations where payments are commonly made in cash (for
example hairdressers)
6.
Non-incorporated businesses reported on a Schedule C (Large amounts
of income make this even more of a target)
7.
Home office expenses shown on Form 8829
8.
Interest or dividend income that does not agree with 1099 amounts
submitted to the IRS
9.
High mortgage interest in relationship to income
10.
Travel and entertainment expenses that exceed the industry norm
11.
High damage or theft loss deductions
12.
Low S Corporation shareholder salaries in relation to other distributions
13.
Business losses several years in a row
14.
Deductions for "independent contractors" (versus employees)
on business returns
15.
Use of offshore trusts or credit cards
(This information is designed to be of general interest. The specific techniques and information discussed may not apply to you. Before acting on any matter contained herein, consult with your professional advisor.)
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