There is no denying that receiving an audit from the IRS can be very worrying. Your mind can start wandering to all of the different things you may have done wrong! The truth is that there are many different reasons why you could end up receiving a letter informing you that the IRS will be carrying out an audit. Therefore, it always makes sense to start out by trying to figure out why you may be getting audited. So, let’s take a look at some of the different reasons why this may have happened:
- You have made a numerical error – There is only one place to begin when it comes to the different reasons why firms may receive an audit, and this is with grammatical errors! When the IRS begins investigating numbers that don’t add up, simply saying “oops” is not going to make a mistake. Even if the error was intentional or not, you could end up paying a fine, so you need to be careful. Using some software is a good place to start to reduce errors when it comes to your taxes.
- Deducting too many company costs – Another reason why you may end up receiving an audit is that you have deducted too many company expenses. The same sort of thing could happen if your business is reporting too many losses. For your expenses to be eligible for a deduction, the purchase needs to be two things. Firstly, it must be necessary for your company. Secondly, it needs to be ordinary.
- Unreported income – Aside from the points that have been mentioned so far, another reason why you may find yourself being investigated is that you have not reported all of your income. IRS will compare your income from year-to-year, as well as receiving copies of your income reporting forms, including Form 1099 and W-2. Therefore, if you leave some of your income off your tax report, you could easily end up being found out, which could result in a big fine! From bonuses to self-employment income, make sure everything is reported.
- Incorrect filing status – Finally, another reason that we see a lot of businesses getting audited is that they do not have the right filing status. This can be challenging to determine, especially if you are married and your other half is either self-employed or does not work at the moment. This is why it makes sense to work with an experienced and reputable tax company, as they will be able to help you determine what the correct filing status is for your business.
So there you have it: some of the different reasons why the IRS may decide to audit you or your business. If you have received a warning of an audit, the best thing to do is get in touch with a team of professionals who can help you to navigate this. Contact https://creativetax.io for the help you need. We can ensure that you are well-prepared for the audit so that everything goes smoothly.