5 Most Common IRS Audit Red Flags

2. Large Charitable Contributions

Claiming significant charitable contributions relative to your income may raise suspicions. In this regard, unconventional or non-cash contributions, such as donating highly appreciated assets, intellectual property, or complex securities, can raise red flags. These types of donations may require additional documentation to substantiate their value and eligibility for deduction. Recently, Miami’s socialites were investigated by the IRS over a yacht donation that cost them $3.5 million in taxes and penalties, reported by Wall Street Journal.