8 Triggers for an IRS Audit

No one wants to go through an IRS audit. Here are eight areas that trigger an IRS audit and tips to help you avoid an audit.


Business use of your car - Don’t guess! Keep either a journal of your mileage or your actual vehicle expense receipts.

Home office deduction - Make sure the area of your home claimed for the deduction is used "exclusively and regularly" as business space; using the kitchen table on weekends to answer client emails doesn't count.

High itemized deductions for your income level - The IRS has ranges they consider "reasonable" for itemized deductions. If your income and deductions aren't "typical" (by IRS guidelines), your chances of an audit are higher.

Non-cash charitable contributions - Make sure you have an itemized listing of every item donated to charity (clothing, household items, books), along with a signed and dated receipt from the charity.

Investment income - Verify the information on any 1099 statements regarding your investments is accurate. A common error is listing an incorrect tax year.

Math errors - Check and double check all the math on your tax returns. An underpayment due to a math error is subject to penalties and interest - compounded daily!

Home buyer credit - To claim the first-time home buyers credit, form 5405 must be attached to your tax return, along with a copy of the settlement sheet. Current homeowners who sell their homes must attach proof that you lived in the house you sold for at least five consecutive years during the last eight years. Failure to include proper documentation may cause either credit to be disallowed.

New car sales tax - Make sure you meet the eligibility requirements and complete the worksheet to determine the credit.


Excerpts from an article on cbsmoneywatch.com

Save Money Being Green

"Going Green" brings up images of a costly outlay for installing solar panels on your roof. Yes, their return on equity is high, but what if you can't afford it? Here are some surprising ways to "go green" that will actually save you money!

Get there, greener. You don't have to own a Prius to drive green. Any driver can increase fuel efficiency and save on gas consumption by getting regular tune-ups, keeping tires properly inflated, and avoiding idling. But considering that transportation accounted for nearly 30 percent of carbon emissions in America in 2006, the cheapest and best thing you can do for the environment is to drive less. According to the American Public Transportation Association, public transit ridership is increasing and in 2009 reached its highest level in 52 years. Or you can join the growing renaissance of fuel-free and fit bicycle commuting.

Flip the switch. The sight of a monthly utility bill can make you shiver--or sweat. But there are simple ways to keep cool in the summer, stay toasty in the winter, and still cut your bill drastically. Catherine Potter, manager for consumer content at smart grid software company OPOWER, recommends this fundamental step: When you're not going to be at home, turn your thermostat up a few degrees in warm months and down a few degrees in cold months. "That will really give you the biggest bang for your buck because it's free to do, and heating and cooling comprise over half of the typical home's energy use."

Work from home. "There was a time when people might have looked askance at home-based businesses," says Christine Esposito, president of Terracom PR. "But now it's one way to walk your green talk." Esposito moved her green business into her home to save money and stay true to its brand. Employees at traditional workplaces can talk to their managers about working from home just a day or two a week to save on transportation.

Get paid to recycle. Sometimes, going green doesn't just save you money--it earns you money. Old phones, printers, monitors, iPods, and personal digital assistants are valuable to companies that refurbish, resell, and recycle them, and they'll reimburse you in cash. "From the lazy environmentalist's point of view, [recycling] is a pain in the neck," says Josh Dorfman, who recommends E-cycler Gazelle. Second Rotation, EcoNew, and BuyMyTronics will also buy your broken gadgets. "You're getting paid to sit on your couch."

Don't be trashy. Reducing your share of trash provides instant green gratification and can help you save on your grocery bill. Whether it's tissues, plastic sandwich bags, or cotton balls, most of our disposable goods have a durable alternative--like handkerchiefs or sponges--that will get the job done just as well and will pay for itself in savings. Even if you find it hard to do without your paper napkins, the easiest change is to replace bottled water with a reusable water bottle.

Conserve water. Your water bill is inextricably tied to your energy bill through your water heater, so reducing your use of hot water can mean extra savings. Dorfman endorses a low-flow showerhead, enabling him to take long showers guilt free. We installed a showerhead with a "shut-off" so the water doesn't run while we shampoo & lather up.

Together, we CAN make a difference!

Excerpts from an article in U.S. News & World Report