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16 Ways To Get The IRS To Audit You

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Bwahhhh! The Tax Man cometh! Here are 16 red flags to watch out for. If you wave them, it will be like if you called up the IRS and said, "Hello? IRS? I'd like you to come audit my sorry ass six ways from Sunday. Here's my address."

16. Attach everything you're supposed to, sign where you're supposed to, and use good penmanship. If your return looks sloppy, they're going to think your numbers might be sloppy.

15. Use exact numbers on your non-cash contributions

14. You say it's a business, the IRS says it's a hobby, you deduct big losses from it, and they audit you. And then you cry like a little girl.

13. This is a no-brainer but if you mess it up, it's a big red flag: What you report as income must match the income forms the IRS is getting from the people who gave you the income.

12. Conformity is good. If your deductions are way out of line with the national average, sound the klaxons. For someone earning $50-$100k, that's $5,812 in deductible taxes, $2,703 in charitable gifts, and $8,946 in interest.

11. All your 1099s are belong to them. Report all interest, dividends and miscellaneous income. If you got a 1099, they're getting it too.

10. Round numbers belong in math problems, not on your tax return. Unless it really was a round number. But it probably wasn't. Just use an exact number, and if you can't remember it exactly, make it look like a real number. You should round cents to the nearest dollar. Just don't round your dollars, if you know what I'm saying. Joe Francis, the guy behind "Girls Gone Wild" does not know what I'm saying and that's why the IRS busted him when he claimed $333,333.33 in false expenses.

Here's some more things that might prod the IRS to go jihad on your return:

9. Claiming tax shelter investment losses

8. Claiming complex businesses expenses

7. Your business involves lots of cash and tips

6. Claiming rental expenses

5. You were audited in the past and had to cough up because of it

4. You're a shareholder or partner in a company that got audited

3. Complex tax transactions without much explanation

2. You're just too nice! and claimed large cash contributions to charities compared with how much you make.

1. Someone finked on you.

We could also call this, "16 reasons I use an accountant."

(Photo: azrainman)

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Comments:

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Um...you should actually round most numbers to the nearest dollar.

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No rounding? Seriously? I seem to recall Turbo Tax rounding my numbers.

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@Sam2k: Yeah, TurboTax actually does that for you, even if you enter cents.

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Ben, what should we do if we are audited, and the government wants us to become a snitch/recover missing trillion dollar bills?


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I did my taxes ALL BY MYSELF last night. Watch me get in trouble because I messed up.

I sort of copied what my preparer did last year, because it was kinda all the same.

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I think their point is, if you have numbers with lots of zeros -- like even hundreds or thousands -- it's suspicious. It makes it look like you guessed or made the number up.

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@Sam2k: Yah, I recall the gov't not liking to deal with cents. Everything gets rounded to the nearest dollar.

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"Here is 16..."

No.

"Here are 16..."

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How much money would be saved if the IRS and all of its nonessential government employees (with generous benefits and pensions) were eliminated in favour of a flat tax?

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Also, if you are going to make up numbers, make sure that quite a few of them start with a 1. Benford's Law.

http://www.damninteresting.com/?p=210

http://en.wikipedia.org/wiki/Benford's_law

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@Frank Murphy: You'd still need to enforce the flat tax somehow. And a lot of audits come from people failing to report some of their sources of income, which they'd still have to do under a flat tax.

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@Matthew Frank: While you're at it, why don't you use your rampant pedantry to point out that 16-10 are, in fact, things you SHOULD do, and 9-1 are the actual red flags? Geesh.

Half-assedness will get you... um... only halfway to being an ass.

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13. "This is a no brainer but it you mess it up... --- should read "This is a no brainer but if you mess it up..."

11. "If you got a 1099, they're getting it to." --- should read "If youg ot a 1099, they're getting it too."

Between 10 and 9: "Here's some more..." --- should read "Here're some more..."

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@Frank Murphy: What tax would your now unemployed government workers and their children pay?

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@Matthew Frank: Please address all spelling and grammar mistakes to the author of the post using the links at the top left of the page. The Editors check their mail more than they check the comments field, which results in less comment clutter and quicker "fixes".

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This article could use an editing. Matthew is right to pick on grammar/spelling, but more importantly, is it an article of what _to do_ or what _not to do_ ? Because #16 is the former and the title indicates the latter... Maybe less irony in the title?

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@wildhare: Rounding to the nearest dollar: good (required, actually, I don't recall the last time I saw a tax form with a cents column).

Rounding to the nearest $5 or $10: not so good.

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@junip: If any of your number combinations that have to be added go above $21,474,836.47 then it spells trouble for their sorry old computers. By rounding everything to dollars, first, they can deal with sums up to $2,147,483,647.00 which enough for most people.

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@Matthew Frank: Send corrections in email to the editor, not in comments. Not all the writers read the comments religiously.

Besides, calling someone's grammar mistakes out in a format like that is just plan tacky (and rude) to boot.

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@crankypage:

I agree cranky :)

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Glad that "direct file" isn't on the list.

I filed my taxes by printing out and sending in paper forms. It's not that I like to keep data entry people employed; I know they use scanners these days. Rather, I just don't trust giving my data to some e-file company.

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Grammar Nazism typically has no place, but I suppose in a blog like this it may. The second point though, was something I was wondering. Is filing all my stuff in order perfectly a red flag, or something I should be doing?

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Yes, he's talking about EVEN numbers, like 100s and 1000s. Or even 50s, etc. I did tax prep for a company this year and we were taught that is a big no-no. If they say around 200 for charity, you make it 197 or 208... something like that.

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@WiglyWorm: Everything has a proper order and should be submitted as such. If you'll notice, the top right corner of almost every form as a "sequence number." The numbers should be arranged least to greatest.

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@Frank Murphy: "There is always an easy solution to every human problem--neat,
plausible, and wrong."

This margin is too small to explain the many, many reasons that a Flat Tax is in reality a bad idea (the top two are: (1) My first dollar is much more valuable to me than your last dollar is to you and (2) legally minimizing their tax obligation is the right of every american), and it's also off-topic.

But in reality, when the IRS is allowed to hire more employees and sic them on high earners, they bring in far more money in taxes that the rich have been avoiding than it costs to employ them. Read up on KPMG and fraudulent tax shelters for one example of what people get up to when they think the IRS isn't looking.

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@crankypage: Yeah, the first couple of items are clearly things you do to NOT get the IRS to audit you.

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We could also call this, "16 reasons I use an accountant to do my taxes."


If you use an accountant, do a sanity check on the return before you file it. A friend of mine prepares taxes and she told me about a new customer whose previous return she looked over. The previous preparer had made up a business out of whole cloth. If that person EVER gets audited he is SOL.

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1. Someone finked on you.

and that ladies and gentlemen is what it all comes down to

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@HogwartsAlum:
1. Someone finked on you.

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@Zyada: Yup. Remember that even if you hire someone to prepare your return, you are legally responsible for its accuracy, not the preparer.

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@WiglyWorm: Since paid copy-editors went the way of the dodo bird around the time that wordprocessors got spell-checkers, a little reminder or gentle correction is sometimes appropriate. This is especially true when the issue is a misused word or idiom, rather than just a typo. I get really tired of seeing phrases like "chomping at the bit", "reigning in (whatever)" or "take a peak at this". Fortunately consumerist is usually better with these than the political blogs are.

Part of it's the language's fault, since we have so many adopted words that obey spelling rules from so many different original languages. But a professional writer should be able to make use of professional tools that allow them to avoid such mistakes, even if they can't remember all the correct idioms on their own.

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This article isn't written very well. Sorry.


If the theme is "Here is how to get audited" then it should be all the things to NOT do. The theme seems to change from line to line.


April 14 is also kinda late for a DIY tax story.


How about a "The late-filers tips and tricks" article?

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The title of the article is "16 Ways to Get the IRS to Audit You" but the first two items (#16 and #15) are actually two ways to NOT get the IRS to audit you. i.e., going from the article title, #16 sounds like if you attach and sign everything, you will get audited, when in fact, the opposite is true.

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@WiglyWorm: Also, I'm not sure "youg ot" is right.

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So many of those are redundant and could have been summarized with "Report your actual income and deductions accurately, don't fudge/guess the #'s."

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And he forgot "Claim home office expenses." The IRS knows people highly overestimate the HOE deductions - it has to be used principally for business purposes, not incidentally.

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@WiglyWorm: Especially when the fixes contain errors. =D (Irony makes me happy.)

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@bwcbwc: Interestingly, though, unsolicited corrections are larger errors than misspellings.

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@HogwartsAlum: Good luck, let us know how it goes!

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I am glad I make a small amount of money every year and I don't claim anything on my taxes. Never had a problem with this.

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@WiglyWorm: Neither can his mind be thought to be in tune, whose words do jarre, nor his reason In frame, whose sentence is preposterous.

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Why not just change your name to Timothy Geithner and make yourself audit-proof.

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16 & 10 are especially the confuzors... Are these things we should do or is it sarcsticly saying not to do them? Is it saying be neat really? Or is being neat one of the 16 ways to get audited?

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@Frank Murphy: A flat tax isn't necessarily a lower rate tax than what you are paying now. Top income earners love the flat tax concept because it shifts even more of the tax burden to the lower and middle income earners than the Reagan and Bush tax cuts have.

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Here is an idea and would fix our economy, nation's debt, and "need" for the messiah....er Obama all at once. FLAT TAX RATE! No more deductions, no loopholes, OR NEED FOR AUDITS.

Everyone gets charged the same amount of taxes based on a percent of what they earn. The rich end up paying more, the poor pay the same or less. Then the gov't does not need to pay as many employees to sort through the current mess or figure out who gets what refund as there would be no need for a refund.

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@Matthew Frank: and this is supposed to be a Consumerist "Feature" article.

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@czetie: We need a flat tax. Heck, a lot of the people in the upper echelons of the government can't even do their taxes right. Obama's cabinet is full of folks that had to redo their taxes once the spotlight was shined on them.

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@crankypage: yep, a lot of this stuff seems to be pulled out of their ass.