FinishLine Tax Solutions is a full-service tax resolution firm based in Plano, Texas, with more than eight years of experience assisting individuals and businesses with complex tax matters. Since launching in 2017, the firm has assembled a team of highly experienced tax professionals, including certified public accountants and Internal Revenue Service attorneys, who focus on practical, compliant approaches to resolving tax debt and filing issues. FinishLine Tax Solutions regularly works with clients facing IRS inquiries, audits, and enforcement actions, giving the team direct insight into the behaviors and reporting patterns that commonly draw additional scrutiny from tax authorities. Through services such as filing back taxes, negotiating installment agreements, and managing wage garnishment or bank levy releases, the firm has helped resolve more than $100 million in client tax liabilities. This background positions the organization to provide objective, experience-based context on common audit triggers.
Red Flags that May Trigger IRS Audits
Many taxpayers have committed errors when filing their tax forms, but have not triggered an IRS audit. Nonetheless, taxpayers should understand red flags that will trigger IRS audits.
In the best-case scenario, taxpayers will furnish the IRS with the appropriate paperwork to satisfy any doubts. Alternatively, the IRS may propose one or more changes, which typically involve penalties, interest, or additional taxes owed. Some taxpayers accept the proposal and pay the extra amount assessed, and the IRS will consider the matter resolved. Sometimes the IRS proposes a change that taxpayers do not accept as valid. In such cases, they have avenues of appeal and, potentially, the option of mediation with the taxing authority.
Most taxpayers aim to avoid triggering any audits from the outset. Avoiding audits starts with accurately reporting all income received throughout the tax year. Even freelancers or part-time workers cannot estimate their income, since the IRS receives copies of their 1099 or W-2 forms. The tax authorities have access to records of all earned and distributed income and automatically conduct a letter audit in the event of a discrepancy.
Simply earning more money can trigger an audit. In 2024, the IRS conducted audits of about 1 percent of those earning less than $200,000 and 4 percent of those earning more than that threshold. Reaching an income threshold of $1 million has triggered around 12.5 percent of audits, reflecting the IRS’s focus on maximizing returns from enforcement and collection activities.
Next, taxpayers who make large donations to charity, while maintaining a relatively small income, also come under scrutiny. Such situations are not uncommon. For example, a taxpayer may make a one-time donation of several thousand dollars to an organization and then lose their job a few months later. Their annual income falls unexpectedly and suspiciously to the IRS, given charitable deductions. Fortunately, one has a clear-cut reason for the discrepancy that the IRS will likely accept.
When such audits occur, it’s important to have valid documentation of the charitable donation, such as filing Form 8283 for donations exceeding $500 and retaining all receipts. Many contributions are non-cash, including art, collectibles, real estate, vehicles, and other assets. In such cases, invest in a professional appraisal of the donated item(s) if the value exceeds $5,000.
For the self-employed and small business owners, another red flag is disproportionate deductions from one’s income. These often involve taking many deductions for uses spanning travel, vehicle maintenance, Internet, and a home office. For the IRS to accept business expenses as legitimate, they must be ordinary and necessary (for the specific trade or business).
Nearly all self-employed people have a certain number of valid business expenses that are deductible from taxes. For these, it’s important to maintain proper records, such as receipts for devices used for business purposes. While you typically do not need to include expenses on the tax form, make sure estimates are accurate and not rounded up too much. For example, it’s acceptable to round up to the nearest dollar. However, having a round number, such as $3,500, can signal to the IRS that your records are inaccurate or poorly maintained.
About FinishLine Tax Solutions
FinishLine Tax Solutions is a Plano, Texas-based tax resolution firm providing services to individuals and businesses dealing with IRS and state tax challenges. Established in 2017, the firm employs a team of experienced professionals, including certified public accountants and IRS attorneys, who focus on tax debt resolution, compliance support, and client education. The organization has resolved more than $100 million in tax liabilities and has received recognition from EIN Presswire, Inc. 5000, and other industry publications for its work in tax relief services.
