What Causes an IRS Audit?
Many people wonder, ‘what might cause me to be audited by the Internal Revenue Service (IRS)? Below is a simple list of items that could trigger an IRS audit. Disproportionate numbers (income compared to deductions) are typically what contributes to IRS audits.
According to a study by USNews and World Report here are some reasons why people may be audited:
- You did not report all your income
- You took the home office deduction
- You reported business losses
- You had unusually large business expenses
- You did not report all of your stock trades
- You did not report crypto currency payments
- You made large charitable contributions
- You earned a lot of money
- You made an error(s) in your reporting
The IRS has to audit using a cost-benefit perspective. Typically, they’re not coming after the “little guys.” It doesn’t make sense to use thousands of dollars in resources to get back a couple hundred dollars of taxes. Well then who are “the big guys?” To put it simply, those with an adjusted gross income of over $400k are at a much higher risk of being audited.
At the end of the day, I wouldn’t be too worried about being audited, as long as you are continuing to honor the Lord and do what is right with your taxes.
“Jesus said to them, “Render to Caesar the things that are Caesar’s, and to God the things that are God’s.” And they marveled at him.” – Mark 12:17
