When the IRS or state tax authorities decide to conduct an audit, the agency is looking into what you or your accountant has submitted in your tax return. While this is simply a way to confirm accurate numbers, some people worry about what an audits entails and what they mean. Below are a few reasons you may get audited.

What Triggers an Audit?

1. Not Reporting Income

One of the simplest ways to attract the IRS’ attention is to not report all of your income. This typically happens when people are hired as a freelance or independent contractor. Even though earnings are not reported on a W-2, it’s likely your employer reported they hired you by filing a 1099 form. This means the IRS is still aware of what you’ve made and will investigate if they believe you may be hiding forms of income.

2. Submitting Errors

If there are math errors on your return, you are more likely to get audited. When doing your own taxes, check your math and watch for transposing numbers. Besides an audit, you may also be fined for your mistakes, even if they were accidental. To ensure your tax return is as perfect as possible enlist the help of an accountant.

3. Deducting Too Much

Be mindful of how many deductions you’re claiming, especially if you are self-employed and filing a Schedule C. This includes listing items like your vehicle as a business expense, even if its not primarily used for business purposes. If you choose the home office deduction, you must prove you use the space regularly and exclusively for your work.

4. Reporting Round Numbers

Numbers on a tax return are rarely even. Do not list estimations and clean numbers; this is a big red flag. Report numbers as accurately as possible, and if you decide to round up to avoid small change, round to the dollar, not the nearest hundred.

5. Claiming High Income

The IRS takes a second look at those who report a high income. If you are claiming an income of $500,000 or more, you’re more likely to be audited. The tax agency will want to assess your numbers and take a closer look at your earnings. This does not mean you shouldn’t report what you made; if your return is accurate, there is nothing to worry about.

If you’re looking for a reputable accountant to help you with tax planning and other financial services, call Cloyd & Associates PSC. Located in London, KY, these certified public accountants can assist both individual filers and businesses, ensuring your return is as accurate as possible. Their other services include bookkeeping and estate planning. Take a look at their tax tools online or call (606) 864-8110 for an appointment.