Though the tax filing deadline has passed, there are many people in Missouri who may be concerned about the potential for additional questions from the IRS. Despite the stress that the audit process can create, the chances of being the subject of one is actually pretty slim, with an individual audit rate of less than 1% in 2017. However, there are certain factors that could attract IRS attention.
For example, failing to report income, either from wages, pensions, dividends or other sources, could be a red flag. The IRS receives copies of a variety of different forms, such as W-2s and 1099s, and a computer cross-checks the forms. If a discrepancy occurs, additional scrutiny will likely result.
Additionally, other factors, such as claiming large deductions or tax breaks, may garner attention. Though large deductions do not automatically result in an audit, one could occur if the deductions are out of proportion with the person’s income. Likewise, taking a large loss, such as on the sale of a rental property, could attract attention. A Schedule C filing could also trigger an audit if it’s a business that reports substantial losses or it appears that losses could be the result of a hobby — such as jewelry-making or dog breeding — and there are other significant sources of income.
Unfortunately, the audit process can be nerve-wracking, regardless of the circumstances. Some with knowledge of the process recommend hiring an experienced attorney for guidance throughout the process. Such a professional can help those in Missouri fully understand the process as well as gather the necessary documents to support their filings. In some audits, there were no changes in the tax filing following completion; in a small portion, the subject actually received additional funds from the IRS.