{"id":9361,"date":"2021-08-13T08:00:18","date_gmt":"2021-08-13T13:00:18","guid":{"rendered":"http:\/\/taxprocenter.proconnect.intuit.com\/?p=9361"},"modified":"2021-08-13T09:59:40","modified_gmt":"2021-08-13T14:59:40","slug":"common-irs-red-flags","status":"publish","type":"post","link":"https:\/\/accountants.intuit.com\/taxprocenter\/tax-law-and-news\/common-irs-red-flags\/","title":{"rendered":"Common IRS red flags"},"content":{"rendered":"

Every year, millions of taxpayers receive correspondence from the IRS after submitting their tax return. Although some notices are sent at random to ensure taxpayer compliance with tax code, many of these letters can be anticipated by a tax professional.<\/p>\n

One of the most common reasons for the IRS to send a letter is a mismatch between the income reported on a tax return and the income the IRS has on file. The IRS is thorough in matching reported income, so even a small difference will trigger an IRS notice. It is important that clients provide you with all income documents in order to help them avoid a change in their tax liability.<\/p>\n

Many notices are sent as a result of disproportionate deductions claimed by a taxpayer. The IRS tracks the amounts of deductions claimed for different categories based on income; amounts that are much larger than average will often receive a notice to verify that the information is accurate. Charitable contributions<\/a> outside the norm, claiming employee expenses for taxpayers other than military reservists<\/a> and performing artists, and medical expenses<\/a> that rise in conjunction with income are all common red flags that trigger IRS correspondence.<\/p>\n

In recent years, Child Tax Credits<\/a> and Earned Income Credits<\/a> have come under increased scrutiny. Taxpayers will often receive a letter to verify age, relationship, support, dependence, citizenship, and residence for dependents. This is especially true for dependents<\/a> who are claimed by a different taxpayer than the prior tax year and disabled relatives claimed for the first time.<\/p>\n

Many returns will also receive a letter as a result of information provided on a Schedule C, especially if there is a loss reported. Returns with $0 gross revenue, even revenue and\/or expense figures, the home office<\/a> deduction, or with excessive expenses compared to revenue are all red flags.<\/p>\n

Some other situations that may generate an IRS notice include:<\/p>\n