No one wants to face an IRS audit, yet certain mistakes during tax season can increase your chances of being flagged. Here are five common missteps to avoid:
- Misclassifying Workers
- Mislabeling employees as independent contractors can lead to significant penalties. Ensure proper classification based on IRS guidelines.
- Reporting Inaccurate Income
- Omitting or underreporting income from 1099s or other sources can raise red flags. Double-check all income statements before filing.
- Mixing Personal and Business Finances
- Failing to separate personal and business expenses can complicate your filings and invite scrutiny. Maintain separate accounts for business transactions.
- Overstating Deductions
- Inflating deductions, like home office expenses or travel costs, can lead to audits. Claim only legitimate and well-documented expenses.
- Filing Late or Incomplete Returns
- Missing deadlines or failing to include required forms can trigger penalties and audits. File on time and ensure all documentation is complete.
Avoiding these mistakes requires attention to detail and proactive tax planning.
Tips for Success:
- Work with a CPA to ensure accurate classification and reporting.
- Keep meticulous records for all income and expenses.
- File early to allow time for corrections if needed.
If you have questions about these common tax mistakes, leave a comment below or feel free to contact me directly. I’m happy to help!
