Avoid These Red Flags In Next Year Return

By Mauro Colabianchi

If you have on your Schedule C a ton of contract labor and you never submitted any 1099’s, that’s a red flag.

If you have a Schedule A with unreimbursed employee expenses, then that’s a huge red flag if it’s really high.

Like I said, if you have a mortgage interest deduction, and it doesn’t match up with your zip code reasonably, then that’s gonna be a red flag. If you don’t have any of those, you have a very low likelihood of audit. That said, if you’re just making up numbers, and you’re submitting a return, there is a provision where if you have committed fraud, there is no statute of limitation on the IRS going back and assessing you. So if you’re just sending in a return that’s completely fraudulent, they can come back and say … they can come back 10 years later and say this was a fraudulent return. We’re gonna give you a civil fraud penalty, 75% of the tax that you should have been reporting. So, the risk is pretty high if you actually get audited. But if there aren’t any red flags, the IRS audits much less than 1% of returns.

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