The Internal Revenue Service (IRS) has a massive backlog of tax refunds pending, and it is expected to receive millions of tax returns during the 2022 tax season. The IRS faces an enormous resource crunch and does not have the workforce to audit everyone’s returns. However, that does not mean that any citizen can dupe and slip undiscovered. IRS in 2019 had audited 771,000 million individuals as per Jackson Hewitt. Experts warn that two dark areas will be closely watched by the investigators of IRS. First, if any citizen claims two specific deductions on their return, they might be opening up to more scrutiny from the tax agency.
Deduction In Tax Returns Is Not Up For Grabs
Deduction in tax returns is not up for grabs, and there are clear-cut rules which must be adhered to. Deductions will reduce your taxable income, and you will owe less to the IRS. You could get an even more significant amount as tax refunds. However, there is no scarcity of fraudsters who claim deductions they are not entitled to. Hence the IRS keeps an eagle eye on write-offs.
IRS Will Keep A Close Watch On Home Office And Auto Deduction
Sarah York, an enrolled agent with the IRS and in-house tax expert for Keeper Tax, explains, “Taking write-offs that are disproportionately large compared to your income tend to trigger red flags.”
Two Deductions particularly will invite a closer look by the tax experts. Dmytro Serheeiv, a professional tax specialist and co-owner of PDFLiner, said that one such deduction on which the IRS will keep a close watch is the home office deduction reports bestlifeonline.com.
“If you use part of your home for business, you may be able to deduct expenses for the business use of your home. The home office deduction is available for homeowners and renters and applies to all types of homes,” as per the IRS website.
The second deduction which the IRS scrutinizes on priority is Auto expense deductions. If there is hardly any income, but the taxpayer claims large amounts of auto expenses, he is sure to come to the notice of the IRS.