My brother was targeted for an IRS audit

Posted: Feb 13, 2014

My brother was audited by the IRS. He did not realize he needed to report/fill out some form for a small estate amount he received in a will. He subsequently got the discrepancy cleared up and it was no big deal. There is this guy, Ben Carson, who seems to be all upset that he thinks he was targeted by the IRS. I am thinking he makes a lot of money and perhaps has had a filing mistake or 2. Here are some common reasons that people are audited as per Kiplinger's *Making Too Much Money Although the overall individual audit rate is only about one in 100, the odds increase dramatically as your income goes up. Recent IRS statistics show that people with incomes of $200,000 or higher had an audit rate of 3.26%, or one out of every 30 returns. Report $1 million or more of income? There's a one-in-nine chance your return will be audited. *Failing to Report All Taxable Income The IRS gets copies of all 1099s and W-2s you receive, so make sure you report this income. IRS computers are pretty good at matching the numbers on the forms with the income shown on your return. A mismatch sends up a red flag and causes the IRS computers to spit out a bill. If you receive a 1099 showing income that isn't yours or listing incorrect income, get the issuer to file a correct form with the IRS. *Taking Large Charitable Deductions *Claiming Day-Trading Losses on Schedule C *Claiming Rental Losses *Deducting Business Meals, Travel and Entertainment *Claiming 100% Business Use of a Vehicle *Writing off a Loss for a Hobby Activity *Claiming the Home Office Deduction IRS is drawn to returns that claim home office write-offs because it has found great success knocking down the deduction and driving up the amount of tax collected for the government. If you qualify, you can deduct a percentage of your rent, real estate taxes, utilities, phone bills, insurance and other costs that are properly allocated to the home office. *Taking an Alimony Deduction *Running a Small Business *Failing to Report a Foreign Bank Account *Engaging in Currency Transactions *Taking Higher-than-Average Deductions If deductions on your return are disproportionately large compared with your income, the IRS may pull your return for review. But if you have the proper documentation for your deduction, don't be afraid to claim it. There's no reason to ever pay the IRS more tax than you actually owe. ;