WHILE there are no guarantees to avoid an audit, there are creative ways to attract one. Below are 12 easy ways to increase your audit profile. Try any combination to help the IRS zero in on your return:
1. Opt out of e-file to use a name different from the one that appears on your social security card.
2. Claim a number of dependents – your mom, grandpa, aunt, cousins – and huge child care expenses.
3. Claim a dependent relative without verifying with child’s parents or guardians. IRS computers automatically tract and identify dependents who are claimed more than once.
4. Create a mismatch with IRS data base files by estimating income from interest or independent contractor, instead of using exact numbers from forms 1099 and K1.
5. Create another mismatch by estimating mortgage interests instead of using numbers from form 1098.
6. Do not report savings accounts that you want to hide from the IRS (or from your spouse).
7. Claim high and unsupported charitable contributions. Claim casualty losses to increase your refund. While you are on a roll, claim high medical insurance and zero insurance reimbursement.
8. Use big round numbers such as $1,000 or $5,000. Better yet, dump them into “miscellaneous” deductions.
9. Submit Schedule C Income from Business or Profession with an attractive net loss. Report low gross receipts and deduct few but unusually high expenses. Make the schedule even more attractive by claiming deductions for home office and 100% depreciation on a car or home computer.
10. Consistently file late returns. Don’t break tradition.
11. Submit sloppy returns. A sloppy return speaks of a sloppy person with shoddy supporting tax documents. You’d be a good catch for an auditor.
12. Join a tax protest group. Join a Barter Club. Stand up for your constitutional rights. The IRS loves people who fight for immunity from income taxes. They love you so much that they will even send you an invitation… for an audit.
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Victor Santos Sy, CPA, MBA, provides professional services in accounting and tax controversy including IRS audit defense and offers in compromise. He also advises clients on choices of entity including corporations for small businesses and LLCs for rentals. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation at 704 Mira Monte Place, Pasadena, CA 91101. The firm celebrates its 35th anniversary this year. You may email tax questions to Vic at [email protected]. You are welcome to visit our website for more than 300 tax tips at www.victorsycpa.com.