Guidant Financial Group Blog

...just kidding. You can never really guarantee these things, but a recent Wall Street Journal article, Tips for Dodging an Audit, suggests that there are things that trigger audits...and the chance to win a FREE examination by the agency!

According to the article, the IRS audited fewer Americans last year than in previous years. However, there was a significant increase in auditees making more than $200,000 annually. The attention given to higher earners was a result of congressional pressure to crack down on tax-dodgers. The IRS audited over 130,000 returns from the $200K and up demographic, which is a 49 percent increase from 2006. There was particular interest in self-employed individuals who file a Schedule C (for sole proprietors) and deal in large amounts of cash.

What is triggering the audit? The article suggests that unusually high deductions in relation to income, discrepancies in data reported by you and your employer/financial institutions and tips by an ex-partner or spouse are common ways to get a personal meeting with the agency. Suspicion is also aroused by deductions taken on any activity that could potentially be from a hobby rather than business.

Here are a couple of suggestions:
• Don’t ignore the IRS if you get a letter from them.
• Hire a professional to help you through an audit.
• Most importantly—only take legitimate deductions.