What can cause a tax audit?

September 09, 2022 by Charla Suaste
Auditor writing on paper with binders on his desk

One of the most terrifying things a taxpayer can experience is that moment when they are casually rifling through their mail, only to stumble onto an envelope with the letters I-R-S stamped across the top and an audit notice inside.

If you are in the camp of people who never have experienced something like an audit, count yourself lucky! But whether or not you have ever received a notice from the IRS, you still might find yourself wondering: What can cause a tax audit? And more importantly, what steps can you take to avoid receiving one?

Let’s talk about some of the primary triggers that may cause you to receive an audit or other notice.
 

Income appears to be missing from your tax return.


These notices are typically computer generated and are usually triggered by the IRS receiving documentation from a third party, such as a 1099 or W2 from an employer. If the income appears to be missing or listed incorrectly on your tax return, the IRS system is flagged regarding this discrepancy – and a notice is automatically generated and sent out.
 

The itemized deductions on your return were particularly high – or potentially incorrect.


You might have heard from a friend of a friend, your next-door neighbor, or your favorite coworker that you could take a particular deduction. For example, you heard that you could buy a new boat and deduct the entire cost on your tax return if you use it to wine and dine potential clients. Or maybe you heard you could write off the cost of your entire house since you make and sell crafts out of your living room. Whatever the case might be, if your deductions seem high or suspicious, this may prompt the IRS to examine your return a little more closely.
 

You claimed dependents or filed with an unusual filing status.


While claiming dependents and certain filing statuses may help decrease the amount of tax you owe – or increase the amount of your refund – they may also put you at risk for an IRS examination. For example, you may be able to initially claim certain dependents or file as Head of Household – but if the IRS comes knocking, you will need to have the proper documentation to prove that these claims are valid.
 

You made a simple math error.


As much as we’d all like to think we would never make such a mistake, math errors happen all the time. We may accidentally put a comma in the wrong place or add an extra “0” at the end of a line item. If a math error is not corrected before the return is filed, this might prompt the IRS to examine your tax return a little more closely.


These are just a few of the reasons the IRS might come poking around your tax return. But it is important to note that, even if you believe you have prepared and submitted a perfectly completed tax return, there are no guarantees that you will not get a notice from the IRS. While you can take precautions to try and avoid receiving an audit or other notice, you can never be 100% sure that you will stay off the IRS’s radar. This is where TaxAudit comes in.

If you have a membership with us and you ever receive a notice from the IRS or state taxing agency, you can call us immediately and we will step in to review the notice and your tax return, as well as determine the next steps to resolve your case properly. In the instance that the audit or other notice is incorrect, we will:

 

  • Review your documentation before presenting it to the taxing authority,
  • Explain your options and develop a strategy,
  • Schedule and attend phone calls and audit appointments on your behalf, and
  • Make sure you pay no more tax than what you rightfully owe.

If you want to have peace of mind knowing that you have world-class experts to represent you in the case of an audit, you can easily purchase a membership on our website or call our Customer Service team at 800.922.8348, and they will be happy to help you!

Tags: audit, tax audit

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Charla Suaste
Communications Content Developer

 

Charla Suaste joined TaxAudit back in 2007 and, over the past 14 years, she has worked in a variety of different roles throughout the organization, including as a Customer Service Representative, Case Coordinator, and Administrative Services Assistant. She now serves as the Communications Content Developer and is passionate about writing, editing, and making even the most complex concepts easy to understand. Outside of work, Charla enjoys traveling, listening to podcasts, and spending time in her garden.


 

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