Tax season is here, and that means it’s time to pay attention to the details. The main reason for that? So you don’t get audited. The good news here is that many audits are triggered by honest mistakes that are easy to avoid. Here are some tax filing moves that you’ll want to steer clear of because they can raise red flags at the IRS.
Not Reporting Your Total Income
One of the key ways to avoid an audit from the IRS is to make certain you’re reporting all of your income. Yes, every penny. That means any freelance jobs, side hustles, whatever. As USA Today reports, if you earn more than $600 a year from a job, that company should issue you a 1099 form. However, even if they don’t issue you one of those forms, you still need to report the earnings. You also need to report any earned interest from a non-IRA or 401(k) savings account.
Using Round Numbers
When it comes to filing proper tax forms that won’t trigger an audit, the dirt is in the details. That means when you’re taking deductions, do not use round numbers as estimates. You want to list the exact amount. If you file for a $5,000 medical expense deduction, that could bring unwanted IRS attention. Round numbers rarely happen, and the IRS knows that. It’s much better to just file for the $4,957 deduction instead.
Claiming Your Car for Business
If you use a car for work purposes, you can claim a deduction for its cost. However, one thing you want to avoid is to claim the vehicle is 100 percent for work purposes. While that can happen, chances are you use that car for non-work purposes at least sometimes. If you claim it for business purposes only, that could bring a closer look from the IRS.