ORLANDO, FL (Ivanhoe Newswire) — With receipts, paperwork, calculations, and massive headaches, no one likes doing taxes. Even though only point 38 percent of individual tax returns were audited in 2022, there are still some things that can increase your risk of being one of the unlucky few that get audited.
CPA with Moss, Krusick & Associates, Renee Varga, says “Taking advice of the non-professional is probably the biggest mistake that I see out there. If you have a sophisticated return trying to do it yourself, that would be a dangerous mistake.”
One thing that can get you flagged for an audit are large cash deposits if you operate a cash business such as a restaurant, salon, car wash, or taxi service. Due to large amounts of cash, it’s easier for business owners to hide some of their income. The bank will notify the IRS if you make a deposit of at least ten thousand dollars, also including cash from side hustles.
“If you make more than $600 on your side hustle, you should be issued a 1099,” says Varga.
Other things that can get you flagged are claiming too many deductions, being self-employed, making excessively large charitable donations, and having assets in another country. Another red flag is mixing in personal expenses with business expenses. Also, reporting a lot of expenses on your tax return ending in a zero or a five.
Typically, you are less likely to get audited if you report income between 50 to 500 thousand dollars. The only group that had more than a one percent chance of being audited are people earning five million dollars a year.
Sources:
https://trac.syr.edu/reports/706/
https://www.thebalancemoney.com/top-audit-triggers-that-catch-irs-attention-4153034, https://taxsharkinc.com/irs-audit-triggers/
https://www.thebalancemoney.com/top-audit-triggers-that-catch-irs-attention-4153034
Contributors to this news report include: Marsha Lewis, Producer; Milvionne Chery, Writer; Roque Correa, Videographer and Editor.
To receive a free weekly email on Smart Living from Ivanhoe, sign up at: http://www.ivanhoe.com/ftk
