Let’s talk about IRS audits and your chance of being picked for an audit.
I’m not a tax professional but as a news reporter, I’ve looked into this subject for years and years. I’ve interviewed tax professionals and IRS officials and I’ve been through tax audits myself, so this information is pretty good.
First of all, your chance of being picked for an audit overall is pretty slim. In general, fewer than one out of a hundred tax returns are audited.
But in reality, every tax return is checked over by the IRS and if the IRS finds an error you’ll get a letter and a bill from the IRS. But if the problems stand out you’ll get picked for an audit.
Let’s talk about the basic simple errors that will result in a letter and a bill from the IRS.
Number one — you omitted a tax form. These tax forms might include 1099 for a part-time job or for bank interest. Or maybe you forget to include a tax form for a casino jackpot.
Remember, when a tax form is sent to you, a copy is sent to the IRS.
Number two — you made a math error. You’ll get a letter from the IRS.
Now, what might trigger an actual audit? Well if you admit too many casino jackpots or claim too many deductions for your kind of job the IRS will want to talk to you.
Years ago when I got my tax audited, the first thing the IRS auditor asked me was “how are the kids?” I said they were great. I also said it was nice of you to ask. And that’s when I was told that some people who claimed they had kids might say “what kids?”
This year the IRS will be looking closely at cryptocurrency, home office deductions, taxes on unemployment insurance benefits, and also profits on real estate and taxes.
Remember if you have tax issues Legal Tax Defense will give you a free consultation. Call now for your free consultation.
Disclaimer: Alan Mendelson is a well-known TV consumer news reporter who reports on tax issues. You should seek professional advice if you have tax questions or issues.