The IRS might flag you for an audit if you do these things

Not as many Texas residents receive audit notices as you might think, but the bad news is that this matters little if you’re a recipient. There are ways to prevent the flags that IRS tax law throws up.

Forgetting to declare income

Even if it’s just a small amount, remember that people and organizations paying you likely pass the information on to the IRS. When the tax authority notices that you aren’t claiming the income from a particular source, it could raise flags. You are even more likely to become a target if you make more than $200,000 a year.

Claiming unusual deductions and credits

Just because you can legally claim something doesn’t mean that you should. A good example is the gambling loss deduction. You might also raise suspicion if you claim the home office deduction.

Running a business can make you more vulnerable

A business comes with a wide variety of deductions. However, what happens when you claim deductions for something that the tax agency considers a hobby rather than a bona fide business? It may result in an audit.

Note that there is a three-year statute of limitations for the IRS to initiate an audit. Therefore, you don’t have to have an accountant go over your tax returns from a decade ago to prevent any surprises in the future. Concurrently, this three-year rule gives you a good window of time to revisit some mistakes and deductions that could make you a target.

If you do get on the wrong side of the IRS tax law, it could be a good idea to talk to an attorney about your situation. An attorney may help you develop a strategy for dealing with the agency.