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Identifying common estate tax audit triggers

If there is a common concern that the many clients that we here at The Law Offices of Frye & Vazquez, P.L. have helped to prepare estate tax returns in Miami share, it is the fear of being audited. You know how stressful if can be to prepare your own individual income tax returns every year. Imagine the added pressure that can come with the Internal Revenue Service asking you to justify what you file. Your annual income may not approach the minimum estate tax return filing threshold ($5.49 million for 2017), so your concerns over having to provide a detailed account of all of those assets is certainly justified. 

They may also be well-founded. According to information shared by the IRS, 1.2 million individual tax returns for 2015 were audited. The auditing process is not necessarily a bad thing, but it may require a lot of extra work on your part. Your best bet, then, may be to do all that you can to avoid it altogether. Doing so requires understanding common estate tax audit triggers. 

Audit triggers are filing errors or perceived inconsistencies that may draw the attention of the IRS. For estate taxes, these include: 

  • Failing to include prior gift tax returns 
  • Excluded or undervaluing a decedent's personal property 
  • Failing to follow a decedent's specified tax allocation
  • Not valuing all of an estate's assets
  • Incorrectly reporting joint ownership property 
  • Failing to explain an estate valuation that is lower than anticipated

Even seemingly small issues like perceived problems with the estate's valuation, not providing support documentation or even proofreading errors can trigger an audit. Is is for these reasons that it may behoove you to have an attorney or tax professional review your return before submitting it. More information on preparing an estate tax return can be found here on our site. 

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