IRS Red Flags, How To Avoid An Audit - 47 ABC - Delmarva's Choice

IRS Red Flags, How To Avoid An Audit

Posted: Updated:

SALISBURY, Md - As tax season begins, experts say filers should be cautious when making their claims. Studies from Kiplinger revealed the 12 biggest mistakes tax filers can make to raise red flags from the IRS and can increase the chances of the filer being audited. Some of these include failing to report all taxable income, taking large charitable donations, claiming the home office deduction and even making too much money.

"Let's say you're in the 30% tax bracket and they disallow $5000 worth of expense or pick up $5000 worth of income. 30% of $5000 will cost you $1500, then they are going to turn around and send a notification to the State of Maryland and it's going to cost you another 7 or 8 %," says Edwin A. Rommel, a certified public accountant.

While charitable deductions are a great tax write-off, experts warn filers to make sure they do not exaggerate in their claims.

"Charitable deductions, believe it or not, have a ceiling on them. I don't think the general tax payer has to worry about that, but the fact is if you have the receipts for what you gave, in other words, you have clothing that you don't wear anymore, take it to the Salvation Army or Good Will. Their going to give you a receipt for it. And write down what you gave and that could be a deduction. They're helping, you're helping, less lower income individuals and government gives you income for that. Also if you give to your church, you're gonna get a receipt that is a tax deduction. If you have the receipt, the government can't second guess it. But if you claim, something and you get asked about it and you don't have your receipt, then you can get in trouble." says Bob Lockwood, sole proprietor of Essentials Accounting LLC.

Experts say preparation is key. Lockwood says, "You want to make sure that whatever comes in the mail during this month, the month of January, you look at everything and whatever comes as income is concerned."

If you follow the rules, cause for concern is slim.

Rommel says, "Most of us would like to make more money and as long as you file an accurate tax return, you don't have to worry about an audit."

The IRS plans to start processing individual tax returns on January 30, 2013. For more information click here.

For more tips on avoiding audits from Kiplinger, click here.

  • Most Popular StoriesMost Popular StoriesMore>>

  • Homeless Sex Offenders

    Homeless Sex Offenders

    DELAWARE - Individuals featured in this slideshow are NOT wanted. They are sex offenders who have registered with Delaware State Police as homeless. These are public notifications.More >>
    DELAWARE - Individuals featured in this slideshow are NOT wanted. They are sex offenders who have registered with Delaware State Police as homeless. These are public notifications.More >>
  • Five Injured Following Ocean Pines Boat Fire

    Five Injured Following Ocean Pines Boat Fire

    Sunday, August 31 2014 10:49 PM EDT2014-09-01 02:49:55 GMT
    OCEAN PINES, Md. - Maryland Natural Resources spokesperson says five people have been hospitalized after a 24-foot boat caught ablaze in Ocean Pines.More >>
    OCEAN PINES, Md. - Maryland Natural Resources spokesperson says five people have been hospitalized after a 24-foot boat caught ablaze in Ocean Pines.More >>
  • Head-On Car Crash Kills 3 In Accomack

    Head-On Car Crash Kills 3 In Accomack

    Saturday, August 30 2014 11:39 PM EDT2014-08-31 03:39:26 GMT
    ACCOMACK COUNTY, Va. - A head-on collision has taken the lives of three after a drunk driver struck a car holding six people. The drunk driver, who was driving a van, has been arrested for DUI. The crashMore >>
    ACCOMACK COUNTY, Va. - A head-on collision has taken the lives of three after a drunk driver struck a car holding six people. The drunk driver, who was driving a van, has been arrested for DUI. The crashMore >>
Powered by WorldNow
Powered by WorldNow All content © Copyright 2000 - 2014 WorldNow and WMDT. All Rights Reserved. For more information on this site, please read our Privacy Policy and Terms of Service.