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How to know if you could be targeted for audit by the IRS

The thought of being audited by the Internal Revenue Service is some people's worst nightmare. Often, it means the government suspects that you may have been less than truthful on your return. Some Georgia residents may find it helpful to know, however, that there are ways to tell if you are at a greater risk of being audited.

According to Crain's Wealth, there are a few basic things that can trigger the IRS to tag you for an audit. The first is simple: your income. If you make more than $200,000 a year, you're chances of being audited automatically go up.

Next, the IRS will take a look at your charitable donations and your deductions. If things don't measure up, they'll want to take a closer look. In this case, it is extremely important to be prepared. Make sure you are filing the correct forms for all deductions and donations. For example, for charitable donations greater than $250, the charity must write a letter explaining the gift. If you don't have this paperwork, the IRS may not believe you.

Owning a second home that you rent out occasionally could also lead to an audit. There are rules about how much you can deduct based on how many days you rent it out, and the IRS keeps a close watch on them.

Finally, if you own your own business you may pique the interest of the IRS. It is easy to fib on your tax return if you run your own business. The IRS is aware of this and won't hesitate to take a deeper look at your finances if they think it is necessary.

These are just a few of the things the IRS considers when determining who to audit. While you may be truthful on your return about your income, donations and deductions, it is best to make sure you have everything well-documented in case the tax man comes calling.

Source: Crain's Wealth, "Warning signs you're at risk of an audit," Darla Mercado, Feb. 19, 2014

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