Moaning and groaning won’t make it go away when the IRS comes a’calling with an audit. Ask the auditor what you did to deserve such a terrifying experience and you’ll likely be met with a shrug, or perhaps a vague reason involving some kind of forms. So really, why did they pick you?
There are a few reasons your tax return could be chosen for an audit, says Fox Business. And no, it’s not because they just want to mess with your mind.
DIF Scores: DIF stands for Discriminant Function System, which is a method the IRS came up with to rate the potential for change based on past IRS experience with similar returns. Then there’s the UIDIF score, which is the Unreported Income DIF, which scores returns for the potential of unreported income. Because e-filing makes it easier for the IRS to analyze data and trends, they can easily run a few numbers and see if they need to come knocking on your door.
Related examinations: If the IRS finds out a contractor didn’t send out Forms 1099 to subcontractors, it won’t just be the employer’s fault — you need to report income of $400 or more if you’re self-employed, whether you got a 1099 or not.
Specific market segments: The IRS picks on a certain industry every year for compliance examinations. Sometimes it’s foreign trusts with offshore accounts, sometimes it’s lawyers, or even servers in restaurants who might be underreporting tip income. So it could just be your luck to be part of that industry when the IRS chooses it to take a closer look at. Congratulations!
For more reasons why you could be getting audited, check out the source link below.
Why the IRS Picked You to Audit [Fox Business]