Answer
An accounting procedure in which the IRS examines a person’s individual or business financial records in order to ensure whether the person paying tax return accurately.
Work Step by Step
An accounting procedure in which the IRS examines a person’s individual or business financial records in order to ensure whether the person paying tax return accurately.
There are some common audit triggers:
(1) Inflating home office deduction.
If someone is using some part of his home for business, then he is entitled to deduct the cost related to business as a home office deduction.
(2) Citing too many losses.
Filing a loss year after year, the person is more likely to face an audit.
(3) Claiming disproportionately high charitable deduction.
The most common deductions that are claimed on a personal income tax returns are charitable deductions. The person must be sure and has all his donation documents properly.
(4) Using too many round numbers.
If IRS found too many numbers that look like guesses, they may ask for documents.
