Personal Tax Return Audit - Form 1040

How Personal Income Tax Returns Are Selected For Audit

Audits are selected mostly by the matching system, now that the IRS computers have been updated. It's very easy to match W-2's, 1099's, K-1's, and other 3rd party payer documents to what you included on your return. There is also a DIF score, and compliance audits.

Returns may be selected if they include the following:

• Income that it looks like there should have been withholding tax taken out, or self employment tax paid.
• Too many credits or exemptions, etc. based on your situation.
• Incorrect social security numbers that don't match dependents.
• Sales of car, house, etc. that should have been reported.
• Transactions that involve complex reporting and the income is large.

For more information see how to avoid an audit by audit proofing your income tax return. The best way to reduce the possibility of the IRS auditing your return is to do the following:

• Make sure you include on the return, all information on documents that were sent to the IRS by 3rd parties. W-2's, 1099's, K-1's, etc.
• Make sure you put everything on the correct lines of the correct forms. Also totals are correct and carry over to the right places on the forms.
• Any items that stand out should be explained on a separate attached schedule.
• Look at the return as a whole and see if it makes sense for you to have that much in deductions based on your level of income.

For additional information see IRS Audit.

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