Why is it that some people get audited while others do not? Is there a little man in a room just randomly pulling out returns to target? Actually the IRS computers are responsible for catching most discrepancies that flag your account for further inquiry. Usually a notice is generated, and the ball is in your court to address the issue.
The IRS actually only audits a little over 1% of all the individual tax returns each year. With those odds, your chances of getting audited are quite low. Math errors may get you an IRS inquiry, but not likely a full-blown audit. So how do you avoid an IRS audit? Well there’s no sure fire way to avoid an audit, but there are certain things that can attract attention from the IRS. Here’s a list of twelve areas that could wave little red flags and target you for an audit. (more…)