In the event you’ve ever puzzled what can result in a tax audit, beneath are 10 of the most typical causes. 

1. Beneath-reporting revenue

You need to report all of the revenue you earned all year long in your tax return. Underreporting your revenue is a standard set off for tax audits. Examples embrace constantly reporting a internet loss or a big lower in revenue with none clear clarification. 

2. Forgetting to file on time

Routinely submitting taxes late can elevate the IRS’s eyebrows. Persistently submitting your tax return on time helps construct a optimistic observe document, which might scale back the probabilities of an audit. 

In the event you’ve ever puzzled what can result in a tax audit, beneath are 10 of the most typical causes. 

3. Submitting amended returns

The one option to appropriate errors in your tax return is by submitting an amended return. This gained’t routinely set off a tax audit until you’re requesting vital adjustments with none documentation to again them up. 

4. A number of math errors

Math errors are a few of the most typical tax return errors taxpayers make. In 2021, the IRS corrected roughly 9 million math errors on filed tax returns.³  Miscalculations may occur on something out of your deduction quantities to the quantity you checklist to your whole revenue. 

Whereas it’s a standard mistake, a number of math errors may improve the chance of an audit. At all times test your calculations earlier than submitting your return to keep away from easy errors. One other straightforward option to keep away from errors is by submitting your taxes on-line as an alternative of by hand. 

5. Utilizing spherical numbers incorrectly 

The IRS needs probably the most correct data doable in your tax return. Excessively rounding up your monetary numbers (like rounding up by tens and even tons of of {dollars} to get a cleaner quantity) can elevate suspicion. 

The IRS means that you can spherical off cents to complete {dollars}, however it’s a must to drop cent quantities underneath 50 cents and improve cent quantities over 49 cents to the subsequent greenback (i.e., $1.29 turns into $1.00, and $1.59 turns into $2.00).⁴  In the event you select to spherical your numbers, make certain you spherical all numbers in the identical method for consistency. 

6. Unrealistic or extreme deductions

Honesty is the very best coverage with tax returns – particularly with tax deductions (the identical is true for tax credit). Whereas deductions are a professional option to scale back your taxable revenue, make certain they’re correct and you’ve got documentation like receipts to confirm them. 

For instance, it is best to be capable to show how a lot you spent on your own home workplace and checklist this quantity on the return – don’t estimate. 

7. Utilizing the mistaken kinds

Finishing the mistaken kinds in your tax submitting may set off a tax audit, as inaccurate kinds can result in discrepancies within the monetary data you present to the IRS. 

For instance, you’ll usually fill out a W-2 type to report your revenue for those who’re a salaried worker. However, small enterprise homeowners or freelancers ought to fill out Type Schedule C to report revenue. 

Utilizing the proper type is essential to correct tax submitting – and minimizing the probabilities of an audit. You possibly can assessment the out there kinds on the IRS web site and decide which of them apply to you. 

8. Overestimating charitable contributions

Overestimating or inflating your charitable contributions (a sort of tax write-off) is a fast option to set off an audit – and for those who get caught, the IRS can penalize you with the Accuracy-Associated Penalty. 

This penalty is 20% of the a part of your taxes that you simply underpaid as a result of exaggerating your charitable contributions.⁵

Have your receipts or statements available when claiming any charitable donations you made throughout the tax 12 months. You possibly can connect them to your return as extra supporting paperwork for credibility. 

9. Clean questions

Leaving fields in your tax return clean can result in pointless scrutiny, even you probably have nothing to report. If in case you have $0 to report in a subject, write that in your type. Filling out each part may help you keep away from issues. 

10. Unsigned returns

Forgetting to signal your tax return is extra frequent than you’d suppose. Sadly, unsigned tax returns aren’t thought of legitimate. At all times test that you simply’ve signed and dated the place required earlier than you submit your return. 

This straightforward (however essential) step will scale back any probabilities of being flagged for an audit – and make it easier to keep away from the effort of resubmitting your return. Bonus: It’ll additionally make sure you get your tax refund rapidly.