The recent presidential election presented many interesting issues, some political, some personal and some ridiculous. One of the controversial matters that came up was IRS audits. The media and the public asked, "Why has Trump been audited so many times?"
As a past post mentioned, presidential candidates will commonly share their tax information with the public. Trump chose not to release the information because he claimed he couldn't; the IRS was auditing him -- again. Is this normal? We won't say whether it is normal. However, we can lay out some factors that tend to increase the chance that you (or Trump) might face an audit by the IRS.
According to QuickBooks, the fact that you are being audited could be due to one or more of the following reasons:
You earned a relatively high income according to U.S. standards
If you earned more than $1 million during the tax year, there is more than a 10 percent chance that you will be audited. These are high odds compared to those who make less money during the year, so it is wise to have a tax professional you trust guide you regarding your tax options and the management of your paperwork.
You rounded numbers, seemingly in your favor
If you aren't dealing with numbers in your personal life's spending, such as figuring out how to tip a waitress, it is safest to be specific for formal processes. Tax filing is one of those formal areas of number crunching wherein you want to stick to the facts and the details. One fudged or mistaken number could persuade the IRS that you may have misled them or filed other false facts.
We will continue this discussion in an upcoming post. Are you facing a tax audit? Talking to an IRS audit defense lawyer is a valuable first step in order to figure out what the problem, if any, might be, and how to best move forward.