Audit Triggers to Watch

We are now heading full-speed into tax-filing season, although it could have a long way to go yet, especially for people who run into an audit situation. In its latest issue, Investment News detailed the factors that are most likely to trigger an audit. Among the things to be aware of:

• High income The $200,000 income threshold is generally considered when one reaches audit territory.
• Tax strategies Charitable donations of stock are one common trigger.
• Deductions The IRS looks at the level of deductions compared to earned income.
• Charitable donations Make sure you get a receipt for everything you donate.
• Entrepreneurs Home-based businesses always get extra scrutiny, as do small-business owners.
• Real estate One of the most common triggers: Vacation homes that get rented out.