No Colorado resident wants to spend more time dealing with the Internal Revenue Service than absolutely necessary. This time of year, most taxpayers are trying to get their information in order so that they can file their returns and get their refund or pay what they owe. Often, the goal during tax season is to simply get through the process of filing taxes without issue. Of course, that is not a goal that is easily achievable for everyone, and some red flags could put some individuals at risk of an audit.
Unfortunately, not all possible tax-related red flags can be avoided. For example, if a person makes a considerable amount of money, it is more likely for him or her to face an audit. However, that does not mean that the person should falsely attempt to make his or her income appear less as that could be considered providing fraudulent information to the IRS, which could lead to a host of other problems, including criminal charges.
Some other red flags that are not easily avoidable when it comes to possibly facing an audit include:
- Working in an industry that deals in cash as the main form of payment
- Running a business
- Making significant charitable donations
- Having a high number of itemized deductions, even if they are legitimate
It may seem unfair that accurately reporting tax-related information could result in an audit, but it is a possibility. Knowing these red flags could help Colorado taxpayers prepare for the possibility of being contact by the IRS, just in case. In the event that individuals or business owners end up having their information scrutinized by the IRS, they may want to remember that they can obtain assistance with handling their defense against any accusations or other issues when it comes to tax matters.