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Proactive Planning Services for Your Company in Rancho Cucamonga Area

“Audit” may well be one of the most dreaded words in the English language. But just because you are being audited doesn’t mean you are in trouble or did something wrong. Whyte & Associates, Inc. has been around for almost 70 years. We’ve seen it all. We understand the “triggers” for audits and know how to avoid them. Furthermore, we have successfully navigated the auditing process on behalf of clients from across the Rancho Cucamonga, California, area. As Enrolled Agents, we have unique authority and services to represent clients at all administrative levels of the IRS.

Why is my company being audited?

It could be the luck of the draw! The Internal Revenue Service notes some returns that are selected based on random computer screenings. Just as you use data for business intelligence within your organization, the IRS uses information from randomly selected tax returns to drive decision-making. These returns are compared against “norms” for similar randomly selected returns. Findings are then used to update the agency’s National Research Program.

What are some common triggers or “flags” for audits?

Of course, your tax return could be flagged for more than statistical formula and research purposes. There may be something wrong with your return or with that of your business partners and other associates. The IRS may also request additional information related to your finances. This fact-finding mission may be needed for them to verify that you/your business has correctly and completely satisfied tax laws. This follow-up could also be used to verify that the tax reported on your return is accurate.

Are there specific types of information that set off alarm bells?

Yes! Several factors could increase your risk of being audited. These include:

  • You make more than $200,000.
  • You have numerous accounts, which could raise the risk of failing to report all of your income.
  • Your business is operated out of the home.
  • Similarly, you take the home office deduction (the IRS scrutinizes what is characterized as a “home office” very closely).
  • You have the tendency to round up or down a lot; for instance, instead of $99.99 or $500.25, you round up to $100 or down to $500. Tax examiners may find this curious and imprecise.
  • Crypto and virtual currencies are liabilities; transactions involving them do not have the same governmental purview as tangible and standard currencies.
  • Many years of operating in the red can result in a deeper dive into your deductions and how thoroughly you are reporting your income. Is something missing?
  • The so-called “little details” make a big difference. Typos and math errors, for instance, give the wrong impression that you are careless and hurried.
  • Deductions are a great tool for minimizing your tax burden; however, many itemized deductions, especially in relation to your income, can raise questions of potential abuse.
  • You’re taking withdrawals from tax-favored retirement accounts.
  • Your business handles lots of cash; for example, you may be a service provider whose employees earn tips.
  • You have over $10,000 in foreign-held assets or have filed a suspect Foreign Bank Account Report.

Many risks and triggers can be avoided or minimized by partnering with experienced tax preparers and auditors. If you are still selected for an audit, our EAs have attained the highest designation awarded by the IRS. They have unlimited rights to represent you on all types of tax matters and before all IRS offices. Do not live with the cloud of an audit hanging over your head. For a sunnier tax outlook, call Whyte & Associates, Inc. at (909) 575-0080 to speak with a member of our team in Rancho Cucamonga, CA, today.

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