7 Common Mistakes to Avoid This Tax Season

Tax Audit

An unfortunate combination of the government shutdown and the usual millions of tax returns needed to be processed has resulted in the Internal Revenue Service (IRS) scrambling to get things back in order. Now that the IRS has reopened, its employees are working diligently to resume their regular operations. On January 28th, the IRS opened the 2019 filing season and that means that taxpayers and tax professionals alike are tasked with the critical role of filing accurately, timely, and efficiently.

The ability to process millions of tax returns in a timely manner means that the IRS must be on the lookout for certain triggers that automatically indicate something fishy is going on. Whether intentionally or unintentionally, defrauding the IRS will result in an audit. In that scenario, the findings of the audit can lead to additional money owed, penalties or interest applied to what is owed, or even an appeal to the IRS if the taxpayer does not agree to a proposed change. Regardless, the goal for any taxpayers should be to avoid any type of audit triggers.

This tax season, as the IRS cycles through millions of tax returns, it is prudent to avoid the following common mistakes that could trigger an audit:

  1. Large charitable donations on a small income
  2. Exaggerating your home office deduction
  3. Inaccurate report of your taxable income
  4. Excessively rounding business expenses
  5. Abusing the homebuyer credit
  6. Overly lavish client entertainment expenses
  7. Errors on deduction and credit claims

These “red flags” or audit triggers will undoubtedly draw scrutiny from the IRS, whether purposeful or not. With a strategic combination of both human processing and automated processing, the IRS is able to pinpoint anomalies based on statistical norms. As such, ensuring that your tax return is accurate and free from any activity that can be deemed as an attempt to defraud the IRS is paramount. It’s no secret that IRS audits are unpleasant and stressful, so avoiding this scenario is worth taking every preemptive measure possible.

The 2019 tax filing season is here, but it doesn’t have to be unpleasant or stressful. At Ellrich, Neal, Smith & Stohlman, P.A., we are committed to providing high-quality tax accounting services throughout the state of Florida. Our tax services include the preparation of federal and state income tax returns for all business, not-for-profit organizations, and personal entities including individuals, estates, trusts, partnerships and corporations as well as business and individual tax planning and consulting.

Our tax planning service goes far beyond filing a tax return. We assist new businesses with basic ownership options and tax consequences and guide growing businesses through year-end planning and projections. We offer a broad range of consulting services that include evaluating material transactions, mergers and acquisitions, international taxation strategies, and estate and trust planning.

In addition, we provide IRS representation for our clients. Our firm knows the tax laws, and we know how your tax return was prepared. We can provide complete representation services before the IRS as well as state and local taxing authorities. We are also experienced in negotiating Offers in Compromise with the IRS to help reduce your tax liabilities. Contact our tax department in the Miami or Palm Beach Gardens office today to learn more!