RED FLAGS

6 RED FLAGS ~ HOW TO KEEP YOUR TAX RETURN FROM ALERTING THE IRS

Want to avoid an audit?  Watch out for these red flags that will likely draw attention to the IRS:

1.  DON'T round ~ Be careful about deductions with a lot of zeros (advertising, mileage, etc.)  Too many round numbers tells the IRS the tax payer has not been keeping records as required and is making up numbers.

2.  DON'T use miscellaneous ~ a large number of deductions reported as 'miscellaneous' may suggest that records and receipts weren't kept properly or at all.

3.  DO separate your business and personal finances ~ Mixing funds is a red flag for the IRS.

4.  DO be careful if you rent your office space ~ the IRS looks at anyone who owns a Schedule C business, pays rent and also receives rent income on schedule E.  If the Schedule C is paying rent to the owner or owner's spouse, it's not OK to pay rent in order to lower self-employment income.

5.  DO pay officers enough.

6.  DON'T deviate from normal deductions ~ home-office, mileage and business meals alert the IRS interest.  The IRS keeps a list of normal deductions for specific tax brackets and types of businesses.