Red flags that tempt the tax auditor


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You're still working on your taxes, but are convinced you'll ship them off to the IRS ahead of the deadline. Then, it'll finally be time to relax. But wait: what if you are one of the unlucky Americans who the IRS chooses to audit this year?

Before you send that return, here are a few red flags that tax auditors look for in returns.

I'm Rose Raymond with your personal finance minute.

When filing a return, it's best to be one of the crowd. Tax experts think IRS auditors look for returns with deductions that are way off from what the average deduction would be for that income.

In addition, entrepreneurs with home businesses are more likely to draw scrutiny, as their returns tend to be more complicated.

Returns claiming the earned income tax credit also draw attention. This credit is complex, and it's easy to make a mistake when claiming it on a return.

But don't let fear of an audit keep you from taking credits and deductions -- if you have your paperwork straight, you should be fine. For more tax information, see Bankrate's tax guide. I'm Rose Raymond.


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