Tax season means the possibility of an audit
It’s tax season. Some people are already done with their taxes while others are still compiling all their documentation. Most people take quite a bit of care when filing their taxes because they care about accuracy. It’s important to be diligent and take your time when sifting through your financial life during the last year. A small discrepancy somewhere could mean you receive an audit notice.
Some people get an audit notice even if there isn’t a discrepancy, but in many cases that is what triggers the IRS to audit your numbers. So what kind of mistakes could lead to issues?
First and foremost, inaccurate numbers can be a bigger issue than you think. While you may have made an honest mistake by forgetting a zero or misplacing a decimal point, it’s a big issue to the IRS and you may end up having to pay a fine. Make sure your numbers are accurate and that you are not estimating to very round numbers.
If you are sorting through your business expenses make sure that those losses are truly business-related. The questions you should ask yourself are “is this an ordinary expense for my type of business?” and “was this a necessary expense?”
Remember to always claim all of your income. You may have forgotten about the income you made freelancing earlier in the year but your Form 1099 will show the IRS your income. Finally, do not forget about your charitable donations. It can sometimes be hard to estimate how much you donated, especially if you donated something besides money, but it’s important that the numbers make sense and that you have proof of the donations.