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2011 IRS Audit Red Flag for Clergy

May 31, 2011

Here is a hot spot on clergy returns that can raise the chances of scrutiny by the IRS.

Ever wonder why some tax returns are audited by the IRS while most are ignored? Well, there’s a whole host of reasons to this age-old question. The IRS audits only about 1% of all individual tax returns annually. The agency doesn’t have enough personnel and resources to examine each and every tax return filed during a year. So the odds are pretty low that every clergy return will be picked for an audit.

However, the chances of being audited or otherwise hearing from the IRS can increase depending upon various factors, including whether there is omitted income, the types of deductions or losses claimed, certain credits taken, and math errors, just to name a few. Although there’s no sure way to avoid an IRS audit, you should be aware of red flags that could increase unwanted attention from the IRS. Here is one of the most noticeably audit red flags for clergy:

Claiming charitable deductions
This comes up again and again because the IRS has found abuses on returns, especially with those taking larger than average deductions. We all know that charitable contributions are a great write-off. However, if your charitable deductions are disproportionately large compared to your income, it raises a red flag. Due to the large percentage of charitable contribution in comparison to their income, many clergy fall into this category.

The IRS can tell what the average charitable donation is for a person in your tax bracket. This should not discourage you from claiming your charitable deduction. But, make sure you keep all your supporting documents, including receipts for cash and property contributions made during the year. There’s no reason to ever pay the IRS more tax than you actually owe.


From → Clergy Tax Law

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