I'm a Tax Pro: 3 Overlooked Filing Mistakes That May Raise Audit Risk

Most audit anxiety centers on the big stuff like unreported income, aggressive deductions, business write-offs that seem too generous and so on. However, according to Logan Allec, CPA and owner of tax relief services company Choice Tax Relief , some of the most common red flags are smaller and easier to miss than people expect.

Allec highlighted three surprisingly small tax filing mistakes that can draw unwanted attention from the IRS. While none involve hiding income or claiming outrageous deductions, they can make a return look inaccurate, incomplete or poorly documented.

Keeping a keen eye on these common pitfalls could help you avoid unnecessary scrutiny or even a potential audit.

Reporting the Wrong Number (Even If Your Math Is Right)

The first issue Allec flagged wasn't about getting your final number wrong, but rather how you arrive at it. "If you receive a 1099 or other tax document, you should report the gross amount on your return," he said.

The problem he sees repeatedly is taxpayers netting their expenses or basis against gross proceeds and reporting only the final figure without showing the calculation behind it. "This sounds obvious, but we get several clients every year who decided to take a shortcut on their tax return and net their expenses or basis against their gross income or proceeds without showing the details of their calculation on their return," Allec said.

He gave a specific example involving a stock trader who correctly calculated a $50,000 capital loss for the year. The math was right. However, the reporting wasn't. "They just reported the $50,000 capital loss as one number rather than showing the details of $30,000 in sales proceeds vs. $80,000 in basis," he said.

The same problem shows up with gambling income . Allec said a common mistake is assuming that a losing year at the casino means nothing needs to be reported at all. "We get gamblers who figure, 'Oh, I lost money gambling this year, so I don't have to report any of the W-2Gs I received on my return,'" he said.

That assumption is wrong. "In reality, the gambling income has to be reported in one's adjusted gross income as other income, while the allowable gambling losses have to be reported separately as an itemized deduction," Allec clarified.

The consequence of skipping this step isn't subtle. According to Allec, failing to report all gross income on a return will almost certainly trigger an IRS underreporter notice known as a CP2000. He warned that dealing with one of these can be genuinely frustrating, largely because of how slowly the IRS's underreporter function moves once a notice goes out.