Financial publisher Kiplinger reports the U.S. Internal Revenue Service (IRS) audited 0.86% (1 in 116) of all individual tax returns in 2014. And due to 2015 IRS budget cuts, this year’s audit rate should drop even further. But don’t get complacent… you may be throwing up “red flags” without even knowing it.

Here are the top five things the IRS looks for in deciding who to audit…

 

1. 

Making more money. Your audit chances increase to about 3%
(1 in 37) if you make more than $200,000 per year… and about 8%
(1 in 13) if you make over $1 million.

 

2. 

Failing to report all taxable income. The IRS gets copies of all of your 1099s and W-2s… make sure your records match theirs.

 

3. 

Taking higher-than-average deductions. Make sure you have documentation for all deductions.

 

4. 

Running a small business. The IRS is shifting its focus away from large corporations and toward smaller “S-corporations” and limited liability companies (LLCs).

 

5. 

Large charitable deductions. The IRS has calculated the average charitable donation according to income. If your donation is far above average, you’ll bring on extra scrutiny.

You don’t want to “play the odds” with the IRS… Learn what the red flags are and do whatever you can to minimize your chances of an audit. You can view Kiplinger’s comprehensive list of the IRS’ favorite red flags, for free, right here.

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