10 Tax Moves That Could Result in an Audit
It’s crunch time—for your taxes.
If you’ve already filed, good for you, early bird! If you’re expecting to get money back, start planning now what you’re going to do with that refund. (By the way, we recommend putting 90% toward your financial priorities and using the remainder on a fun splurge).
If you haven’t filed yet, you might be trying to figure out, rather quickly, how to reduce your tax burden. But be careful—there are certain things that raise audit red flags with the IRS, so make sure that any moves you make don’t draw the government’s ire. Here are 10 of the most common factors that make the IRS suspicious, as rounded up by CNN Money.
1. You’re a Bit Too Giving
If your charitable donations seem high for someone in your income range, you may find the IRS knocking at your door.
Many people trip up when estimating the value of non-cash donations. The clothes you gave to Goodwill are only worth their resale value, not what you paid for them five years ago.
2. You Take the Home Office Deduction
This deduction is notoriously complex, difficult to calculate and often abused—to the point that the IRS is introducing a simpler way to do it this year.
Whereas the old system required a separate form and confusing calculations, this year you can take a standard deduction of $5 per square foot of office space, up to 300 square feet.
Keep in mind that working from home occasionally doesn’t qualify you for the home office deduction. Your home office must be your primary place of business, and used exclusively for work.