Did you know that IRS issues 220 million notices every year? If you get an IRS notice, don’t panic, don’t ignore, don’t respond yourself. Send a copy to your CPA asap.
Remember that IRS only sends notices and letters via the United States Postal Service (USPS), no phone/email/fax/social media.
CONSISTENCY is highly important to reduce the risk of being audited.
REPORT ALL INCOME. Provide all Forms 1099, W2, 1095-A and Schedules K-1 to your tax preparer. IRS is automatically matching the information reported on those forms to your tax return. A mismatch is a red flag for IRS, and it will trigger an automated letter being sent to you by IRS.
CHARITABLE CONTRIBUTIONS deduction is a red flag for IRS if charitable deductions are disproportionately large compared with your income. IRS tracks average charitable donation by income level.
BUSINESS DEDUCTIONS. High and even amounts are red flags.
MEALS &TRAVEL business deduction. Large deductions for meals and travel are always an audit flag.
SCHEDULE C RED FLAGS: low (or zero) gross revenue with excessive expenses, even revenue/expense figures, 100% business use of vehicle.
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