Taxes are due within the next couple of days and the pressure of getting taxes in on time can result in errors. It is important to slow down and avoid errors as some of these errors can lead to a closer look by the Internal Revenue Service (IRS).
The stress of meeting the tax deadline will likely pale in comparison to the stress that comes with being the subject of a tax audit. Reduce this risk by avoiding these top mistakes:
- Business deductions for personal activities. This is a big red flag. Any business owner, entrepreneur or employee claiming business expenses within a tax return must avoid the temptation of claiming personal expenses as business expenses. This is particularly tricky when it comes to claims involving a home office or an activity that would qualify as a hobby instead of a true business. Keep careful records of all claimed expenses to back up any allegations of a fraudulent claim in the event of an audit.
- False claims of charitable donations. Philanthropy is a wonderful quality — a quality even the IRS respects…to an extent. The agency will take a closer look at your return if the charitable donations claimed are disproportional to your income. Again, keep records to back up your claim.
A piece by Consumer Reports also notes the agency is taking a close look at deductions involving rental properties. In some cases, expenses and losses within this market are deductible. This often hinges on how active you are in the management of the property. Read through the requirements carefully before taking the deduction.