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Tax Audit Red Flags
Whether  you've been audited or not by the IRS, you might want to dot all your "i's" and cross all your "t's" and double check your math to avoid this nerve wracking experience. But even that doesn't guarantee an audit free year.  To give you a little comfort we are listing below some factors that trigger the IRS that may make them more likely to pay attention to your tax return.
1. Making Too Many Errors -  One of the most common reasons your return gets scrutinized is the fact that your forms are filled with math errors, incorrect spelling, typos, etc.  So your first line of defense is not to give the IRS a reason to look twice. Make sure your financial records ie: bank statements, pay checks match the numbers that are on your return.  Numbers that don't match give cause for suspicion.
2. Self Employed - Unfortunately, the IRS tends to look closely at entrepreneurs and freelancers.  There are two issues:  they want to be sure you have a real business and want to be sure your are reporting income accurately ie; not claiming personal expenses as business write-offs. 
3. Not Fitting The Mold -  The IRS uses a system to compare each individual's tax deductions and credits against what they determine is average for certain income brackets.  It's a big red flag if yours does not fit the model.
4. Earning Six Figures or More - Today the IRS is concerned with lowering the country's tax gap - (the difference between taxes owed and taxes paid).You are more likely to hear from the IRS if you are a six figure earner than taxpayers in lower brackets.
5. Claiming Home/Office & Job Expense Deductions - Too many people claim these deductions for inappropriate reasons.  There are detailed rules for deductions, so don't claim anything unless you know it's right.
There are steps you can take to protect yourself if you fall into one of the above categories.  A best means of self defense is thorough record keeping that back up your claims.Keep receipts, bank statements and all pertinent information that prove what you put on your tax forms. 

Email arthur@theroartgroup.com today for a complimentary consultation and discuss how you can avoid IRS red flags.

Record Retention
What To Save What to Throw Out

Now that we've passed the April 15 tax filing date and considering "spring cleaning" and perhaps downsizing, it's a
good time to think about disposing of the boxes of files, receipts and other financial records that you have accumulated throughout the years and are collecting dust!
The general rule is that you must keep the information that supports the items reported on individual tax returns until the statute of limitations expires. That is usually 3 years from the due date, including the extended date of the return. However, if the IRS believes your income was understated by 25% or more or if there is a suspicion of fraud, there is no time limit.

This information has been summarized from publications of the IRS. If you have would like a copy of our record retention list or have specific questions about your situation, contact me - tel: 917-744-3661 or email:  arthur@theroartgroup.com.

The Roart Group, LLC 

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