If you really, really want an audit, the following list will show you exactly how to get one:
(1) Get Paid in Cash – If you’re a waiter or waitress, market trader or professional gambler, then you get paid in cash a lot. To the IRS this means you have an opportunity to hide some of that cash. This makes you a more likely target for an audit.
(2) Get Yourself a Bank Account in Another Country – Nothing makes them more keen on going through your finances than you stashing some of that lovely money in a foreign country. People with overseas accounts tend to be quite well off and they will want to know why those riches are going somewhere else. New rules make foreign accounts easier to access for the IRS so don’t think you can hide it!
(3) Become Successful – Earn over $200,000 and you are more than 50% more likely to be the recipient of an audit.
(4) Become Unsuccessful – If you file a loss on Schedule C as a self-employed worker for your first year they’ll understand. Do it year on year and they’ll get suspicious. Either you are really bad at business, or you are deducting a little too much for their liking.
(5) Be Like Robin Hood – If you are too charitable, to the point where your donations are matching your income levels, they may want to take a look at why you’re so darn good and wholesome. 80% donations will be a huge red flag.
(6) Round ‘em Up – If all the numbers in your deductions and income columns are rounded and neat numbers like $1000 or $15,000 then they might start to wonder if you are rounding up or down. Even if you are rounding in their favour, they’ll still want to check those books.
(7) Moving that Money – If you move large sums from your business accounts to your personal accounts then they will come knocking at your door. Banks are under obligation to tell the IRS if you receive deposits in excess of $10000.
Alex is a freelance journalist and financial blogger. He loves to write about baseball and jazz but spends most of his days writing about mortgages, credit cards and umbrella companies .
- The IRS Provides Offshore Account Disclosure (2010taxes.org)
- 2011 Tax Cautions Delivered By The Internal Revenue Service Concerning Fraudulent Tax Returns (2011taxes.org)