Taking higher-than-average deductions, losses, and credits
If the deductions, losses, and credits on your return are much bigger than your income, the IRS will check on that. Also, be cautious, as taking a big loss from the sale of your rental property or any other investments might interest the IRS, and the same goes for bad debt deductions and any other worthless stock.
However, if you have proper documentation for your deduction, loss, or even credit, you shouldn’t be afraid to claim it. Never pay more tax to the IRS than you have to.
Having large charitable deductions
Charitable contributions are known to be a good write-off and…it makes you feel good. Even so, if your charitable deductions are much bigger than your income, the IRS will become curious.
That’s mostly because the IRS knows exactly what’s the median charitable donation. If you don’t get the proper appraisal for donations on your property, or if you don’t file the IRS Form 8283 on time, you could become a bigger audit target.
