There are many reasons why tax returns get audited by the IRS. The DIF score has a lot to do with the reasons. Here are some tips that you need to know to stay away from an IRS audit.
Your chances of being audited by the IRS will be much are greater under the following circumstances:
You have very large amounts of itemized deductions on your tax return that exceed IRS targets. These targets are based on the DIF scores.
You claim tax shelter investment losses on your tax return. These are all reviewed and based on whether or not the shelter even makes sense.
You have complex investment or business expenses on your tax return. Sometimes putting an explanation on the return makes a lot of sense.
You own or work in a business which receives cash in the ordinary course of business.
Your business expenses are large in relation to your income on your tax return. This is based on Gross income and Adjusted Gross income.
A prior IRS audit resulted in a tax deficiency. It has been flagged for a tax audit.
You have complex tax transactions on your tax return.
You are a shareholder or partner in an audited partnership or corporation.
You claim large cash contributions to charities in relation to your income on your tax return and there is no documentation.
An informant has given information to the IRS. Many times spouses or former employees are the source.