You know the deal: unless you’re making some serious cash, it’s highly unlikely that the IRS will audit you. For Millennials, the likelihood of a tax audit is pretty close to zero.
That is, unless you end up with a suspicious-looking tax return. But how do you know if your tax return looks suspicious?
Well, if you’re trying to game the system, which, by the way, is a huge no-no, then chances are your tax return will have some red flags that spur the IRS to investigate.
If you’re not, however, there are certain things you can do that will still trigger an audit. These are 6 of the biggest tax filing mistakes to avoid, so you don’t have to spend hours of your life searching for receipts while the IRS combs through your finances.
This may be obvious to you, but when you do your taxes, accuracy is paramount. If you made $57,320 last year, don’t say you made $57,000 (or $58,000, either). Rounding to the nearest dollar is acceptable, but that’s about it.
Put in the exact amounts for everything you can, from income, to how much you paid for childcare, to your mortgage interest. Estimates will work for certain things – for example, the utilities you paid for that apply to your home office – but in general, it’s much safer to put accuracy above all else.
If you’re doing your taxes yourself, make sure you check, double-check, and triple-check your math.
Writing a number down wrong or carrying a 2 when you meant to carry a 4 could jeopardize the accuracy of your entire return, making you more susceptible to owing additional taxes – and triggering an audit. That’s one reason that using a service like E-File, which does all your math for you, is a good idea.
You’re overzealous in claiming business expenses or self-employment expenses
Claiming a dinner during which you wooed a huge client to sign with your business is perfectly legitimate. Claiming the bespoke suit you bought to impress that client is not.
Business and self-employment expenses are places where people are often tempted to inflate their claims, even if only by a little bit.
Remember, however, that the IRS goes over thousands and thousands of business deductions every year. They have a good idea of what’s typical and what’s not. If you’re making $45,000 and claiming $15,000 in business expenses, that’s a pretty big red flag. ‘
You forgot to report income
Plenty of Millennials have a side hustle, LLC, or sole proprietorship they use to bring in additional income. As great as these income boosters are, they can make tax season a bit more complicated.
While your employer sends you that handy W-2 with all your income and withholding neatly reported, keeping track of every dollar you made throughout the year requires a bit more effort.
It’s absolutely necessary that you do so though – otherwise, your records won’t match up with the records of the business that paid you (yes, the IRS does check them against each other).
Forgetting to report income can not only mean you owe more taxes than you thought you did. It can also make the IRS think you’re trying to hide income, which can mean you’re next in line for an audit.
Nobody wants to be audited. Avoid it by using E-File to file your taxes fast, easily, and accurately.