Providing Innovative Solutions To
Complex Tax Problems

Will Your Tax Return Activate an Audit?

Latest News

Most taxpayers are aware that there are blatant mistakes that will cause the red flags to fly at the IRS. Yet there are those who are willing to get very creative at tax time to save a little money. The typical areas that most attempt to play dangerously in are fairly consistent. However, others take their creativity seriously and not only trigger audits, but lots of laughs. The IRS is not the best audience for comedy routines. So don’t try any funny business with them. And do keep in mind that the IRS recently announced it will not require taxpayers to amend their returns or pay back any extra money received in their refunds due to incorrect health care-related tax information on Form 1095-A. This is good news for individuals who may have mistakenly filed an inaccurate return. However, the IRS is not forgiving of all inaccurate returns no matter how funny or outrageous they are. Some are saying that the IRS is looking at middle-income earners to audit this year due to the budget cuts. So if you are considering making a “mistake” on your tax return, have a look at the following list published on of creative ways that other taxpayers have made in an attempt to save on their tax bill. Do not imitate them! Questionable Dependents: Attempting to claim “Fido” as a dependent is popular among clients with pets. One CPA reported a woman even tried to claim her unborn child as a dependent. Entertainment Expenses: Weddings certainly can be entertaining, but deducting the full cost as an entertainment expense does not make for a good relationship with the IRS. Here’s a good one: Speeding Tickets. Even if it’s because you were late for a business meeting, speeding tickets are fines and therefore, not deductible on your tax return. Unusual Charitable Deductions: While it’s true that charity can take on many forms. a vehicle that was impounded by the police was not deemed a qualifying deduction, which one CPA’s client was insisting on declaring. Claiming Losses from Hobby Activities:  The IRS does not allow deductions for hobby expenses. One client learned that when he attempted to take deductions on his horse ranch. Cosmetic & Beauty Treatments: While some professions may require a certain appearance, the cost of haircuts, plastic surgery, massages and salon expenses are generally not deductible. Creative Investments: The loss on the sale of a personal house, while unfortunate, does not qualify as an investment by the IRS. Home Office: Deductions on a home office are limited to the portion of the home dedicated to the business. Clients have attempted to do more though, from the cost of groceries to the mortgage. Boat as Computer: Want smooth sailing on your tax return? Then you should not deduct your boat as a “water computer,” as one CPA had to inform their client. Hunting Trips Because You “Talk Business”: That weekend of hunting with friends is generally not deductible, no matter how often you talk about your boss. (

Related Articles