By Elizabeth Williams
DTN Special Correspondent
INDIANOLA, Iowa (DTN) — Tax breaks commonly used by farmers and ranchers also tend to raise red flags with the Internal Revenue Service, increasing the likelihood of an audit.
?In general, tax returns with enormous losses or with a big swing in income from one year to the next get a critical eye from IRS,? said Brent Bright, principal at KCoe Isom, based in Loveland, Colorado. But, sometimes, it’s a mismatch in the details of a return that draw attention.
As farmers prepare to file their 2019 taxes, DTN asked experts to explain seven common red flags that lead to audits.
1. UNMATCHED INCOME REPORTING
The IRS’s computer system will automatically generate a notice if you don’t report all the income others are reporting on your behalf, Bright said. This includes 1099s from people you’ve done work for (anyone who has paid you $600 or more in the course of trade or business) or K-1 income from your partnerships.
