These 5 Tax Moves Could Get You Audited in 2016

The IRS performs audits when a tax return seems inflated or its numbers seem off. In most cases, it is a simple mistake on the preparer’s part and is quickly remedied. To avoid being audited, try not to make these five mistakes.

Big Charitable Donations

When making large charitable donations, make sure that you are donating to a 501(c)(3) organization. Only donations made to these organizations are tax deductible. Larger donations used for tax deduction purposes are scrutinized a bit more than smaller donations.

Being Rich

Being wealthy alone is reason for audit. The IRS is going to make sure that all of your earnings are reported and that major reported expenses are justified. Of course it’s not a bad aim to acquire wealth, however if you do become rich you should be aware that you are more likely to face an audit.

Sold Investments

When you sell an investment, your broker is now required to report the cost basis directly to the IRS. You must report the exact same numbers that your broker submits to the IRS. If the numbers do not match exactly there is a high probability of facing an audit.

Withdrawing from Retirement Funds Early

When you withdraw from a retirement fund early – i.e. before age 59 and a half – you must pay an additional 10-percent tax. Moreover, withdrawing early can also trigger an audit in certain cases.

Auto Mileage Usage Reports

Improper reporting of mileage when using your own vehicle for work purposes can trigger an audit. You are permitted to deduct $0.575 per mile for work travel. The vehicle must be used solely for work purposes to qualify.

The best advice is to make sure your figures are correct and that you report absolutely everything. Leaving out the most miniscule detail can trigger an audit. Keeping immaculate records throughout the year helps prevent these mistakes.

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