There are common reasons that could get someone to be a target of auditing from the IRS including earning so much the previous year, claiming high amount for deductions and categorizing the living room as your home office. You should keep your eye on these common reasons to make sure you do not get an audit but expert in the tax industry said that the IRS is now targeting new things for 2018 that taxpayers might not anticipate. Jackson Hewitt’s chief tax officer, Mark Steber, said that IRS was quite busy last year. Taxpayers are recommended to have audit protection insurance in order to avoid a situation where they are unguarded from unexpected costs.
One of the reasons for an audit could be a cash stash you kept overseas. An accounting firm’s managing director, Bill Smith, said that offshore bank accounts could raise a red flag with the IRS. This came after the United States made a partnership with foreign regulators which gave them inside info regarding overseas stash.
If you are benefiting financially from sharing economy, you could be audited. TurboTax surveys revealed that 3.2 million people are part of the trend known as gig economy. The same survey expects the figure to increase to 7.6 million when 2020 comes. People who are working as an Uber driver are classified as self-employed by the IRS thus their earnings are also subjected to taxes. This is why the form 1099 should be included in their filings or else the IRS could take interest in your return.
Lying about purchasing health insurance could be a red flag to the IRS. This is one of the newest issues in 2018 that could be a reason for a taxpayer to be audited. This is not something to be taken lightly because lying could get you in trouble as the agency can easily check, and they are checking, if one has health insurance as indicated in their tax form.
Declaring yourself as a professional real estate agent is not a good idea because, though you might benefit from it especially if you have money-losing properties, you could be caught and be audited. At the end of the day, it is best to have audit protection insurance to make sure you are covered in case of an audit.