Getting ready to file your taxes? Avoid these audit triggers.

Tax season is upon us. The Internal Revenue Service (IRS) began accepting tax returns on Monday, January 27. Those putting the finishing touches on their returns may wonder what the IRS looks for when reviewing returns -- what exactly triggers an audit?

1) A large income. Unfortunately, the IRS is more likely to conduct an audit on taxpayers who report a larger than average income. The audit risk more than doubles for those who report over $5 million in income compared to those who report less than $1 million. However, it is also important to note that the reverse is true. Taxpayers who do not report any income are also at an increased risk of an audit. A failure to report doubles your risk compared to those who report $50,000 or less.

2) Questionable credits. One credit that has a history of abuse and results in increased federal scrutiny is the earned income tax credit. Why? Because this credit can result in a refund. It doesn't just reduce the taxpayer's obligations, it can increase the refund. It is available to qualifying working class families with children. Those who claim this credit should have paperwork to support the claim.

3) Excessive charitable donations. Charitable donations have often led to a closer review of tax returns. This may be even more true with recent tax reform. The tax reform resulted in larger standardized deductions. In an effort to increase the savings that come with itemized deductions, some taxpayers may increase charitable donations one year and skip the next, essentially stacking their donations into a one-time gift instead of spreading it out over a couple of years.

Although some of audit triggers are not avoidable, others are. Whatever the trigger that leads to an audit, any taxpayer that is concerned that a review could result in serious financial penalties or potential criminal charges is wise to seek legal counsel. Some issues that could warrant such concerns can include the potential for the IRS to make accusations of understated or missing income, a large amount of deductions without supporting documents to back the claims, or a failure to account for foreign assets.

No Comments

Leave a comment
Comment Information
Email Our Team

Contact Us to Get Started Today

Located in the Washington, D.C area, we serve clients in the District of Columbia, Maryland and Northern Virginia, as well as across the country and overseas. For a free initial consultation, call 202-381-1261 or complete our brief online form.

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Six Convenient Office Locations in and around the DC Metropolitan Area

Washington, D.C.
1050 Connecticut Ave NW #500
Washington, D.C. 20036

Phone: 202-618-1873
Fax: 888-235-8405
Washington Law Office Map

Columbia Office
10440 Little Patuxent Parkway, Suite 300
Columbia, MD 21044

Phone: 202-618-1873
Phone: 410-497-5947
Fax: 888-235-8405
Columbia Law Office Map

Annapolis Office
839 Bestgate Road
Suite 400
Annapolis, MD 21401

Phone: 202-618-1873
Phone: 410-497-5947
Fax: 888-235-8405
Annapolis Law Office Map

Fairfax Office
8280 Willow Oaks Corporate Drive
Suite 600
Fairfax, VA 22031

Phone: 202-618-1873
Phone: 703-988-4817
Fax: 888-235-8405
Fairfax Law Office Map

Rockville Office
199 E. Montgomery Avenue
Suite 100
Rockville, MD 20850

Phone: 202-618-1873
Phone: 240-599-5009
Fax: 888-235-8405
Rockville Law Office Map

Baltimore Office
400 East Pratt Street
8th Floor
Baltimore, MD 21202

Phone: 202-618-1873
Phone: 443-743-3381
Fax: 888-235-8405
Baltimore Law Office Map