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Will You Be Audited?

This article was written by in Taxes. 4 comments.

Through everyday conversations, I know there are people who stretch the tax law as much as possible in order to claim tax deductions for “business-related” expenses. I’d like to follow up after tax season to see how far they’re actually stretching the rules, and if it’s fishy, to determine how many of these individuals end up being audited.

According to H&R Block, audits are on the rise. Apparently, Americans earning $100,000 have a 1 in 107 chance of being audited, while those on the other side of six figures have a 1 in 63 chance.

Here are some signs that may trigger the IRS to scrutinize your return:

* No signature
* Incorrect social security number
* Unreported income
* Itemized deductions
* Casualty losses
* Hobby losses

Of course, none of these things automatically triggers an audit, but honesty is the best policy. Not agreeing with the tax laws is not a good enough reason to not pay what is owed.

Updated July 16, 2010 and originally published April 17, 2006. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 1 comment… read it below or add one }

avatar Making Our Way

Key defenses to prepare for the possibility of an audit are:

1. complete documentation of your deductions
2. engaging a professional (cpa, etc….) to review your return before sending it in
3. avoiding some of the most glaring red flags like:
a. home office deduction
b. hobby business (a schedule c “business” that has not made a profit in 3 of the last 5 years)

Good luck.


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