Only 10 more days until the 2011 Tax Deadline. This year the IRS extended the deadline to April 18th due to Emancipation Day, a holiday observed in the District of Columbia, falling this year on Friday, April 15th.
Having to pay taxes is probably one of the most hated things, we as Americans have to do. That unfortunately may lead many to want to “fudge” a bit when filing their taxes. Needless to say, the IRS is vigilant in its quest to find inaccuracies on our tax returns. Below are the Top 4 items that tend to come under the microscope, and trigger an audit, more than others.
1. Stated Income
Don’t forget to report any income. State every single penny listed on your W2, 1099 and other income statements. The IRS’ computers track all of your income forms.
2. Charitable Donations
The IRS examines charitable contributions closely. It looks to see if donations are out of the ordinary for other tax payers in a similar tax bracket. For example, the average charitable contribution for those earning between $50,000 and $100,000 a year is a little more than $2,600, according to the IRS.
3. Auto Mileage
Because tax filers have fudged this itemized expense in the past, it’s now become a red flag for the IRS. As a refresher, if you are searching for a job or self-employed or drove around for a charitable event in 2010, the IRS will generally let you deduct the related auto mileage expense from your taxable income. But you must keep a record of your trips including the distance you drove, the purpose of the trip and have a receipt from the gas station if possible.
4. Capital Transactions
Since there’s tremendous room for error or guesswork when reporting capital transactions, the IRS computers scan this portion of returns carefully. If, for example, you sold stocks or a home, it’s up to you to describe the transaction, including what you paid and what you profited or lost. It’s not like your income from a job where the IRS gets a copy of your W2 or 1099 form. Just like with your mileage deductions, keep accurate records of all capital transactions.