pwfm Money & Men

Red Flags That Might Trigger an Audit

We know tax laws can be confusing at times, but here’s one simple tax rule the experts can all agree on this year: Don’t give the IRS anything at all to fuss over. According to the Boston Globe, the IRS will be looking to collect every extra dime it can get this April 15th, to help make up for a huge budget deficit. In fact, the IRS expects to conduct over 1.5 million audits in 2009. Thankfully, most of their attention will be focused on people who make more than half a million dollars per year – since studies show they’re the ones most likely to cheat on their taxes. However, that doesn’t mean you’re off the hook if you make less than that. So how can you make sure your tax return survives the eagle-eye of the IRS?

Ian Comisky, a tax attorney from Philadelphia, says your best move may be to hire a professional accountant. You can find a certified accountant near you at a website like GoodAccountants.com. Experts say the #1 advantage to hiring an accountant is that they’ll guarantee your return! That means that if the IRS decides to audit you, they’ll go after your accountant, and not you. The IRS also offers a tax preparation service for free. It’s called the Volunteer Income Tax Assistance Program and you can learn more about that at IRS.gov. The free help is generally located at community centers, libraries, schools, and shopping malls. What are the most common red flags that might trigger an audit?

• You earn too much money. If your salary increased significantly in 2008, the IRS will pay extra close attention to your return and people earning $100,000 or more are the most likely to be audited.
• You gave too much to charity. Experts say that people who donate more than 10% of their income to charity are the most likely to trigger an audit.
• You made a careless error. Something as simple as misspelling your name, or putting the wrong digit in your Social Security number could be enough to set off an unwanted audit.

Be careful when you fill out your tax forms – and if you’re unsure about any of the paperwork or laws, get help!