While it may be common sense and intuitive for some, there are some key things that might trigger an IRS audit.
While the IRS still does random audits and one may never know what specifically triggers them, Rob Wood, a tax attorney, who's been practicing for 35 years at Wood, LLP in San Francisco, California, says the overwhelming majority of the ones he's seen have been triggered by something in particular. He says to be aware of 1099's in particular and to keep track of them and make sure they're recorded on returns. Usually, a 1099 issue is one where you forget to put it on the return, either received from a consulting job or a legal settlement or judgement. The public ones, he notes, does make you a target, so those carry bigger risks of getting audited than the random ones.
Wood says to not panic if you are audited and to respond quickly and appropriately. The majority of audits are correspondence that are very frequently computer-generated when something doesn't jive, he says.
For more information on the article written in Forbes magazine about this, click here. Robert Wood is a tax attorney with Wood, LLP in San Francisco, California and spoke with The Tax Law Channel, an affiliate of The Legal Broadcast Network. The Legal Broadcast Network is a featured network of the Sequence Media Group.