How To Stay Clear Of The IRS Radar: 4 Reasons Your Return May Be Flagged
Filing your taxes is a critical annual task that everyone must do. It’s essential to make sure you file your tax return accurately to avoid any discrepancies or issues with the IRS. However, despite your best efforts, the IRS may still flag your return for additional scrutiny.
If you’re worried, here are a few reasons your return could be flagged.
Inconsistent information
The IRS compares the information you provide on your tax return to the data it receives from employers, banks, and other institutions. If the info doesn’t match, your return may be flagged for further examination.
This could be due to a simple error, such as a typo or a misplaced decimal point, or it could be a more significant issue, such as intentional tax fraud.
Large deductions or credits
If you claim a significant number of deductions or credits, the IRS may flag your return. This is particularly true if you claim deductions that are much higher than the national average for your income level or occupation.
The IRS may suspect that you are inflating your deductions or credits to lower your tax liability.
Self-employment income
If you are self-employed, you are more likely to be audited than someone who is not self-employed. The reason for this is that self-employed persons tend to assert deductions and credits that are unavailable to conventional employees.
Additionally, the IRS may flag your return if you report a significant drop in income from one year to the next.
International transactions
If you have international transactions, such as foreign bank accounts or investments, the IRS may flag your return. The IRS is particularly concerned about individuals who attempt to hide income or assets in offshore accounts to avoid paying taxes.
If your return is flagged, it doesn’t mean you did something wrong. However, it does mean that you may be subject to additional scrutiny and may need to provide additional documentation to support your tax return.
To avoid these issues, make sure you file your tax return accurately and on time, and seek the help of a tax professional if you have any questions or concerns.