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Guiding You Through The Legal Process

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Actions that may lead to an audit

On Behalf of | May 1, 2019 | Tax Audits

It is unlikely that an individual in Georgia or anywhere else will have his or her tax return selected for audit. Overall, just 0.6% of returns will face further scrutiny after they are sent to the IRS. The odds of an audit are influenced by how much money a person makes. Those who make $10 million or more have an audit rate of 14.4%, but money is not the only factor in determining whether a return will be reviewed.

If a person files a Schedule C, it could pique the interest of the IRS. This is because a self-employed individual may have a greater chance of overstating expenses or not reporting all of his or her income. Those who claim charitable deductions that seem high in relation to their income could also be more likely to hear from the federal tax agency.

A person who has significant losses on a tax return may be more likely to receive an audit. This is because the IRS may question whether a person is truly running a business or claiming expenses for a hobby. The IRS may also question how a person is able to provide for themselves on a small income or no net income at all. Failure to report income could also result in an audit or a notice that a person owes money to the IRS.

Those who are facing a tax audit might want to hire a tax attorney to represent them. An attorney may help in an audit dispute in multiple ways. First, he or she may be able to negotiate with the government on a taxpayer’s behalf. Furthermore, an attorney may help a person gather key documents or assist in creating a defense against any assertions that the IRS has made against a taxpayer.