Itemized Deductions Amount

[Black Bart]

What's the most you're comfortable with? I've got one now deducting $25K against $77K AGI. Since that's almost 1/3, I wonder if there's an audit line that gets crossed at a certain percentage?

[Jiggers]

Itemized?

What is the amount for?

Medical, mortgage interest, charitable?

[JohnH]

Bart:
I'm very comfortable with 1/3 of AGI as long as it's the net deduction for Tax Prep fees (after the 2% haircut)

[erchess]

Receipts

It has never bothered me how much of AGI they claimed as Itemized Deductions. For tax years before this one I told them in detail about the receipts and records they needed to have and figured that it was their funeral not mine if they were caught lying. It became clear to me after April of 08 that this had changed so I started insisting that I had to see the receipts and records. But given that the records exist I would still write a Schedule A that reduced the person's taxable income to a negative number if they told me that they had lived on savings or credit cards or some other believable story.

[Black Bart]

Does a rule of thumb audit % exist?

What is the amount for?

Medical, mortgage interest, charitable?

Medical- zero
Taxes -- $4K ($3,500 state tax)
House interest-$10K
Trucker's days on road-SMA & misc.-$11K (12,500 before 2%). I'm rounding off to nearest thousands here for discussion purposes.

While I never heard of an "A" audit-trigger amount, I have heard two seminar speakers over the years mention that Schedule C becomes interesting to IRS at $100K gross sales (one said there's minor interest at $25K). Don't know their info source unless DIF stats filter down from IRS-HQ to agents and eventually to outsiders.

Anybody ever heard a specific percentage mentioned by any source?

[ChEAr$]

Ah, a trucker you say.

Medical- zero
Taxes -- $4K ($3,500 state tax)
House interest-$10K
Trucker's days on road-SMA & misc.-$11K (12,500 before 2%). I'm rounding off to nearest thousands here for discussion purposes.

While I never heard of an "A" audit-trigger amount, I have heard two seminar speakers over the years mention that Schedule C becomes interesting to IRS at $100K gross sales (one said there's minor interest at $25K). Don't know their info source unless DIF stats filter down from IRS-HQ to agents and eventually to outsiders.

Anybody ever heard a specific percentage mentioned by any source?

That's not "out of line" atall IMO.

Assuming his log books prove it and you've accounted for reimbursement by
employer. Truckers have been known to "forget" this item you know.

[Black Bart]

Yeah,

(Truckers) That's not "out of line" atall IMO.

They have more than the average guy, but mine don't usually run $25K total. Still, and no matter what the total is comprised of, what I'm asking is this -- does anybody know of/ever heard of an arbitrary percentage of AGI that triggers IRS audit-interest in itemized deductions?

[erchess]

No BB I don't

know of any percentage level that automatically triggers IRS interest in Sch A. I would bet money that the diff scores are based on occupation and on particular lines of Sch A rather than on the total. For example it might be that a third of agi as employee business expenses would generate more interest than half of agi as medical in most professions.

An office I worked in at the time got a Sch A audit of charitable giving because the client had tithed to his church and given nominal amounts to other charities. He had the receipts and the auditor apologized saying that she could not believe someone on this person's income would be so generous. But as far as I know she was working from her own notions and not from anything that came from higher sources.

[Black Bart]

Okay, thanx folks and I yield...

(I don't) know of any percentage level that automatically triggers IRS interest in Sch A. I would bet money that the diff scores are based on occupation and on particular lines of Sch A rather than on the total. For example it might be that a third of agi as employee business expenses would generate more interest than half of agi as medical in most professions.

You're probably right, EC -- a straight percentage of the whole thing would probably be too simple and many audits seem based on a single outrageously high "A" item (frequently tithes - or "tites" as one of my guys writes it). My ATX diagnostic advised me to "check the amount of mortgage interest" ($10K) for my trucker (he has three different house mortgages). Come to think of it, wonder where ATX comes up with its warning amounts?

...Assuming his log books prove it and you've accounted for reimbursement by employer. Truckers have been known to "forget" this item you know.

No, no Harlan; it's not that they forget -- they're simply misunderstood ! Why, just a few years ago I told one of my (now) ex-best friends: "If you don't list that per diem reimbursement (NOT included in the W-2), then I can't deduct SMA for days on the road." His stance on my stance was "Well, I just don't understand that at all..."

And my stance was exactly the same.

[JohnH]

Bart: Let's be careful about how we talk about our stance. A certain public official from Minnesota had to go into way too much detail last year about his stance - I still cringe when I hear him try to explain it.

[Burke]

The IRS posts "averages" for itemized deductions for previous years. My last audit was triggered by charitable deductions (a tither) AND the fact that he had a new business with big Sect 179 write-offs in one year which produced a loss he could take against other wage income. The auditor told me it was because 2 items were flagged by the computer, not just one or the other. It was concluded with no changes. He had excellent records. And we showed her pictures of his tricked-out van in the business.