What Factors Trigger The IRS To Audit A Return?

Few things can cause dread to set upon the heart of a mere mortal quicker than the utterance of the word “audit.” Having to go toe to toe against the IRS in a battle of claim justification is a long and often expensive affair that should be avoided at all cost. As a result, here are some things the IRS looks for when determining what returns get extra scrutiny:

• Claiming a home office deduction will often get extra attention. The strict requirement that the space be used solely as the principle place of business is not easily met but often claimed by individuals who set up a simple office. So use this deduction with care unless you are clearly within the guidelines.
• Making higher than usual deductions for charity or medical expenses will raise a red flag in all likelihood. In particular, claiming a deduction that is out of line with the claimed gross income will certainly lead to more questions from the IRS about what happened.
• Be careful claiming all use of a vehicle as a business expense. While the deduction per mile is attractive to many, it must be only for true business purposes like driving to meet a client not to pickup the kids from school. So if you say all the mileage for a vehicle is for work, you better have something to back up the claim if the IRS comes calling.

See, 3 tax red flags the IRS looks for, KVUE, April 17, 2016.