If you make a mistake on your tax return, it could lead to an audit. An audit is an official review of your financial records by the IRS or state tax authorities to ensure that your reported information is accurate. While not all mistakes will trigger an audit, certain errors can increase the likelihood that you’ll be selected for one.
Common tax mistakes that may trigger audits
Certain errors on your tax return can raise red flags for tax authorities. For example, failing to report all sources of income, like freelance earnings or side jobs, could lead to an audit. Incorrectly claiming deductions or credits you aren’t entitled to can also attract attention. Additionally, math errors or inconsistent information between your tax return and supporting documents can make your return look suspicious.
The role of underreporting income
Underreporting your income is one of the most common reasons people get audited. Whether you forget to report freelance income or fail to include all wages, the IRS has ways to track your earnings. If the income you report doesn’t match the information reported by your employers or clients, it could prompt an audit. It’s important to ensure that all income is accurately reported to avoid complications down the line.
What to do if you’re selected for an audit
If you’re selected for an audit, don’t panic. The process typically involves providing additional documentation to verify the accuracy of your tax return. You may need to submit bank statements, receipts, or other supporting documents. It’s essential to cooperate with the IRS or state tax authorities and provide them with the requested information on time. Being proactive can help resolve the situation without complications.
If you made an error, it’s better to correct it early by filing an amended return before it’s flagged. This can help reduce the chance of being audited and avoid any further penalties.
Tax mistakes don’t lead to an audit every time, but certain errors are more likely to draw attention from tax authorities. Accuracy is key when filing taxes to avoid unnecessary stress and complications.