For its Insider Tips From the Pros package, Kiplinger’s spoke with dozens of experts in fields ranging from college aid to travel to glean insights they apply to their own financial lives and share with their own family and friends. Frank Degen, immediate past president of the National Association of Enrolled Agents, revealed these tips for avoiding a tax audit:
"Only about 1% of taxpayers are audited. What triggers an audit is generally something on the tax return that’s out of the ordinary," he says. "For example, if you have a side business and file a Schedule C, the IRS will flag large losses, particularly if they offset other income. The IRS is looking to see if your activity is a hobby as opposed to a business.
"On Schedule A, large charitable contributions could be a red flag because now you have to have a receipt for every item," he continues. "I don’t ask to see every receipt for charitable contributions, but I will specifically ask a client if he or she has receipts for all contributions.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Unreimbursed business expenses are another item you see people get flagged on," he says. "If your preparer isn’t asking serious questions about these items, you need a new preparer."
Discover even more ways to attract unwanted scrutiny in our popular collection of 14 Red Flags for IRS Auditors.
-
M&A Is Why UnitedHealth Group Stock Is in of the 100,000% Return ClubUnitedHealth has given a master class in mergers and acquisitions over the years.
-
How GLP-1 Drugs Could Revolutionize RetirementGLP-1 drugs like Ozempic and Wegovy are already changing the way we age and manage chronic conditions.
-
First-Time Filing Taxes? Key Tax Tips to Know for 2025Tax Filing Preparing your IRS taxes for the first time may seem daunting, but here are some return preparation and filing tips to start.
-
Mail Theft Crisis: Why Your IRS Tax Refund Is At RiskTax Refunds Millions of dollars in tax refunds were stolen in the mail last year. Here's what you should know.
-
Ten IRS Audit Red Flags for Retirees in 2025Retirement Taxes Retirees who think they can escape the IRS audit machine should think again.
-
States with Emergency and Energy Sales Tax Holidays in 2025Sales Taxes Save on appliances with a state emergency preparedness or energy-efficient tax-free weekend in February.
-
New Colorado Tax Credit: What’s the Scoop?State Tax Everything you need to know about the Colorado family affordability tax credit in 2025.
-
IRS Tax Refunds Are $526 Bigger This Year: Here's WhyTax Refunds Inflation-related changes to the tax code could result in a larger refund.
-
Retire in Costa Rica With These Three Tax BenefitsRetirement Taxes Costa Rica may be a good place for retirement if you like the low cost of living and savings for your heirs.
-
Ten IRS Audit Red Flags for Self-Employed IndividualsIRS Audits Taxpayers who file Schedule C with their Form 1040 have a greater chance of an IRS audit.
