Doonan Tax Services offers tax preparation and filing support for taxpayers in and around New York City. All clients receive free representation by IRS-certified enrolled agents in case of demand letters or audits.
Although the IRS may audit any taxpayer, certain practices and characteristics may increase a person's risk. Individuals with substantially higher than average income are more likely to undergo an audit, as the IRS stands to recoup more funds from these individuals.
Relatedly, if a return is significantly lower than expected, or if deductions do not seem commensurate with income, the IRS may begin an audit to assess whether the taxpayer is claiming these deductions correctly or not. This is particularly likely for charitable donations that are much higher than average for a person at a particular income level.
Similarly, individuals who file a Schedule C for business income between $25,000 and $100,000 have an audit risk of 2.4 percent, which is significantly higher than wage earners in the same income bracket. This higher risk largely stems from the many potential business deductions, such as home office expenses and entertainment costs, that some taxpayers may abuse. Those with valid deductions must be sure to keep all receipts and written evidence in case an audit does occur.
