Certified Financial Planner Kimberly Foss is talking with Paul and Bethany via satellite about three red flags that can get you in trouble with the IRS during tax season. Writing off expenses that you kept track of for the past year allows you to lower your tax bill, but utilizing restraint will help you avoid having the IRS question the legitimacy of the deductions and launching a time-sucking audit.
- Work Related Expenses: Do not get carried away. Trying to claim that your vehicle is used exclusively for business won't fly with the IRS. Taking exorbitant deductions for work-related trips and meals can trip an alarm with the IRS.
- Charitable Donations: All charitable gifts you make throughout the year should be backed up with solid records, especially if you fall in a lower income bracket. High charitable deductions by lower income individuals have been known to raise eyebrows with the IRS.
- No Health Insurance: Make sure you check the right box on your return if you did not purchase health insurance in 2015. If you have not paid the penalty, this could "increase your chances of receiving a notice, and with the passing of the Affordable Care Act, each taxpayer needs to confirm that they have health care insurance coverage. You should receive a form 1095 A, B, C if you are covered; if not you may have large penalty to pay.