Tax Audit Red Flags (6-10)
Red Flag #6 – Making abnormally large charitable donations
There are many benefits to donating to charity for humanity’s sake, but did you know that the government also rewards charitable donors? It’s true! You can get tax breaks for making a contribution to a worthy cause. But, of course, it has to be real. If you make a donation that is high in comparison to your income, that will give the IRS a need to investigate further. So if you make a donation over $250, make sure you have all your receipts and records to back it up. And if you make one over $500, you’re going to need to file Form 8283, which is the necessary tax form you are supposed to submit to the IRS when you (or your business) makes a non-cash donation of over $500. And just as you would for a donation over $250, it goes without saying, you need to keep the records of your <$500 donation handy just in case the IRS comes sniffing around.