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Tax situations that could lead to tax audits

On Behalf of | Mar 11, 2020 | Tax Controversies

Like people across the country, the last thing most Massachusetts residents want to do is end up on the radar of the IRS. Of course, the agency does not necessarily have to have a reason to begin an audit, but taxpayers certainly do not want to give it one. Unfortunately, some situations could lead to tax audits if filers are not careful.

For instance, self-employed Massachusetts residents need to make sure they report all of their income and carefully choose the deductions they take. Only those deductions that represent something essential to working should be taken. In addition, make sure that any source of income claimed as self-employment is motivated by making a profit and not a hobby that occasionally generates some income.

Many people give a portion of their hard-earned money to charity. However, if the IRS believes a person gives too much, it may trigger an audit. Individuals do not need to put a limit on how much they give, but they may need to put a limit on how much of their giving they claim on their taxes. If an individual is not sure how much a property donation is worth, there are guides to reference.

Everyone makes mistakes, but the errors some taxpayers make could trigger tax audits. Many audits happen by mail these days, so it would be a good idea to carefully review any correspondence from the agency. Anyone facing an audit would probably benefit from consulting with a tax attorney in order to help ensure that he or she does not end up paying more in taxes, penalties or interest than absolutely necessary.


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