IRS audits focus on returns with red flags, and questionable deductions are a common trigger. Many taxpayers use the standard deduction, but itemizing can produce larger offsets for significant expenses such as medical bills, mortgage interest, or charitable donations. Self-employed individuals who work from home may deduct substantial home office expenses, but the deduction requires adherence to explicit IRS rules and limits. Home office calculations can be complex, errors are common, and incorrect claims increase the likelihood of scrutiny or adjustments. A simplified deduction method exists, but accurate selection and documentation remain necessary.
Audits from the IRS are no picnic. The Internal Revenue Service has a job to do, and that often involves targeting people they think are gaming the system for a more intensive inspection. The IRS can ask for clarification, adjust your tax filing for you (and allow you to either accept the changes or show proof that you had the correct figures to begin with), or go all in with an audit of your finances. They are rare, but the IRS is more likely to audit taxpayers whose returns have certain red flags.
One such problem area can come from your deductions. Many taxpayers take the standard deduction and call it a day. This is the right approach for plenty of people, but under certain circumstances, you'd be foolish not to itemize your deduction and gain access to a larger offset on your gross tax burden. If you've shouldered significant medical bills, paid a heap of cash in mortgage interest, or donated a lot of goods in the last year (or all three, among others), itemizing this offsetting feature provides an important tax break that you should know and use.
Because it can get complicated in a hurry, the IRS may be more likely to eye you if home office deductions show up on your tax filings. This is because it's easy to get the calculation wrong, and many people seek the deduction despite not being eligible for it. Some workers may also look to expand the area of their home they claim as a workspace, an approach that can result in potentially significant consequences.
Collection
[
|
...
]