Best Life: Top tax red flags
ORLANDO, FL (Ivanhoe Newswire) - With receipts, paperwork, calculations, and massive headaches, no one likes doing taxes.
Only point 38% of individual tax returns were audited in 2022, but there are still some things that can increase your risk of being one of the unlucky few that get audited.
“Taking the advice of a non-professional is probably the biggest mistake that I see out there. If you have a sophisticated return trying to do it yourself, that would be a dangerous mistake,” said Renee Varga, CPA with Moss, Krusick & Associates.
One thing that can get you flagged for an audit is large cash deposits if you operate a cash business such as a restaurant, salon, car wash, or taxi service.
Due to large amounts of cash, it’s easier for business owners to hide some of their income. The bank will notify the IRS if you make a deposit of at least ten thousand dollars, also including cash from side hustles.
“If you make more than $600 on your side hustle, you should be issued a 1099,” said Varga.
Other things that can get you flagged are claiming too many deductions, being self-employed, making excessively large charitable donations, and having assets in another country.
Another red flag is mixing personal expenses with business expenses. Also, reporting a lot of expenses on your tax return ends in a zero or a five.
Typically, you are less likely to get audited if you report income between $50 to $500,000. The only group that had more than a one percent chance of being audited are people earning five million dollars a year.
Contributors to this news report include: Marsha Lewis, Producer; Roque Correa, Videographer and Editor.
Click here to sign up for our newsletter!
Click here to report a spelling or grammar error. Please include the headline.
Copyright 2023 WMC. All rights reserved.