Three things that increase your risk of getting audited

Generally getting a knock on the door, phone call or letter in the mail is a pleasant experience. Maybe a friend or family member is checking in to say hello, or that pizza you ordered is getting delivered. However, this pleasant feeling quickly fades when you open the door, pick up the phone or open that letter and find the Internal Revenue Service (IRS) is asking questions about your taxes.

Getting contacted by the IRS is not uncommon. In some cases the agency is simply requesting additional information. However in others, the IRS is contacting you to let you know about an impending audit.

What can trigger an audit from the IRS?

There are a few things that increase your risk of getting audited. Some of the more common include:

• Income. Individuals with an income over $200,000 have a higher risk of getting audited when compared with those who earn less than $199,999. Those in this later group have less than one percent risk of getting audited.
• Discrepancies. A failure to include an adjusted gross income or to have high deductions can also raise questions from the IRS. A recent publication by Mondaq notes that those who handwrite their tax returns are also at a higher risk of undergoing an audit. This is likely because these returns are more likely to have discrepancies than computer generated returns.
• Entrepreneurs. Simply being an entrepreneur can increase your risk of an audit. Self-employed entrepreneurs and sole proprietors are at an increased risk compared to those who are part of multimember LLCs.

Regardless of the reasons that contribute to the audit, one thing is clear: do not meet with or attempt to deal with the audit on your own.

What should I do if I am audited?

Those who are audited are wise to seek professional assistance. A legal professional can guide you through the process and help to better ensure that your rights are protected.