Few words in the English language set off alarm bells like the word “audit.” The good news is there are ways to reduce the likelihood the Internal Revenue Service will tag you for an audit. Nevertheless, if a letter from the IRS does appear in your mailbox, don’t panic.
Statistically, the IRS only audits about one percent of taxpayers with incomes under $200,000, according to the tax experts at the Oklahoma Society of Certified Public Accountants. There are red flags that can raise the likelihood you’ll be audited, however.
Here is another helpful tip to protect yourself against an audit:
Do claim rental losses. The IRS is scrutinizing rental real estate losses, especially those written off by taxpayers claiming to be real estate professionals. The IRS will check to see whether they worked the necessary hours, especially in cases of landlords whose day jobs are not in the real estate business.