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Sunday, March 9, 2014

Are you inviting a tax audit?


Even the most well intentioned tax filer can wind up being audited by the IRS. 

There's no guaranteed way to avoid an audit because the IRS randomly picks thousands of returns every year. However, TurboTax has a list of red flags that could put you more at risk:

• Innocent mistakes: Be very careful that all your numbers match. That goes for income, dependents and exemptions. The IRS's automated system will easily detect discrepancies.

• Bending the truth: Being 100 percent truthful on your tax return is an absolute must. Not reporting all your income is a surefire way to attract attention. Outright lying, especially if you earn a six-figure income or are hiding large sums of cash, is definitely behavior that will get you audited.

• Making too much or too little: Taxpayers who make more than $1 million a year and those in very low income brackets are most likely to be audited.

• Filing manually: According to the IRS, filing returns electronically can dramatically reduce errors, lowering the odds of an audit.

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