Are You Provoking A Tax Audit?

Depositing Cash

Large amounts and numbers of cash deposits never fail to get the IRS's antennas up, as cash businesses and individuals paid in cash are known to underreport income frequently. Some cases may come down to lax accounting management, while others involve "skimming" a bit off the top to reduce taxes. Egregious cases involve sophisticated tricks to hide profits and can constitute tax fraud.

To avoid triggering an audit by depositing cash, make certain all of your entries into the accounting system match your cash intake. If this is too complex, consider hiring a tax accountant. IRS auditors also look at a business's or individual's entire return and situation in light of the cash deposits to determine if income might be hidden somewhere. When they see a red flag, they audit, so always keep records that show you reported all income from depositing cash. However, even if you can prove you reported all income, IRS auditors rarely give up there. They need to collect something to justify their time, so they will look for other errors on your return and try to dispute deductions, if possible. Be ready to justify your position on every deduction.