IRS audit flags

Ever wonder if your tax return is setting off flags to the IRS?  I found a very interesting article where the IRS shares what issues on a tax return might invite an audit.

IRS Targets 1040 Schedules, Procedures in Preparer Compliance Visits

This specific article focuses on the IRS making visits to professional tax preparers offices, including CPAs.  These are investigations of the tax preparer,  not the taxpayer (or so the IRS says). The IRS is investigating the following:

Returns with Schedule E Supplemental Income and Loss (from rents and royalties), reporting income or loss of more than 50% of adjusted gross income and high levels of rental property depreciation or loss.

Schedule A Itemized Deductions flags included high levels of charitable contributions or employee business expenses, and either reported as round numbers.

Schedule C, Profit or Loss From Business (Sole Proprietorship)

Moral of the story: If you have a tax return with any of these schedules, use a knowledgeable, ethical CPA to prepare your return.

How to Chose a Qualified Tax Preparer (pdf)

Carol Topp, CPA