Are you doing your taxes? Kiplinger's Personal Finance magazine has put together a list of things that will get you flagged by the IRS this tax season.
Here are 14 audit red flags that will trip you up
- You make too much money. The IRS will target those with incomes above $200,000. You have a 1 in 30 chance of being audited.
- Not reporting taxable income. You must report all 1099s and W-2s, even if you believe them to be incorrect. (Deal with the discrepancies after filing.)
- You give a lot of money to charity. The IRS knows what others who make similar income to you tend to give and will question you if you're claiming too much.
- Claiming day-trading losses on Schedule C.
- Claiming rental losses.
- Deducting business meals, travel and entertainment.
- Claiming 100% business use of a vehicle. Be careful, salespeople! To counter any possible IRS questions, I know someone who keeps a paper log on the dashboard and writes down every mile for work, the date and what it was for. If you do want to claim all the cost for a business expense, be sure you have another vehicle too.
- Writing off a loss for a hobby.
- Claiming a home office deduction.
- Taking an alimony deduction.
- Running a business where almost all money is in cash.
- Not reporting a foreign bank account.
- Engaging in currency transactions.
- Taking excessive deductions. Again, the IRS knows what is outside normal bounds based on your income.
Kiplinger also wants you to beware, as some 1099 forms can trick you. This video explains how.