Video: How to Report Itemized Deductions to the IRS

This Season: Tailgating; New Year, New You; Tax Time

Medical expenses and property taxes are examples of itemized tax deductions. Learn how to document your contributions in relationship to your income to avoid a tax audit from the IRS in this free personal finance video from an experienced accountant.

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Video Transcript

How to avoid an IRS audit. If you have a large amount of itemized deductions. Itemized deductions are generally medical expenses, taxes that you pay on the state level, property taxes, charitable contributions, mortgage interest, and other miscellaneous expenses and losses. How to avoid that audit. You want to make sure that they're reasonable in relationship to your income. Now, some people might have deductions in a year that exceed their income. Obviously that can't be helped, but you want to make sure that you're keeping those receipts. And, as you're documenting this information on your return, you might consider attaching explanations. If items are significantly disproportionate to your income. For example, large amounts of charitable contributions. You might consider photos. You're going to be taking those photos, but when you're avoiding the IRS audit, you might need to attach a supplementary explanation of what you're donating. Possibly you had a very low basis in information or you're giving away large items that you've accumulated over many, many years but you finally just cleaned out the closets. If you have very large and unusual medical expenses in a year, you might have had to take out loans to pay for those medical expenses. Sometimes just providing an additional explanatory paragraph or supplemental statement to your return can help you avoid that IRS audit. It will help explain how the items that have been deducted on your return are disproportionate to your income, but they're justified. So that would be how you avoid an IRS audit when you have deductions that might exceed your reasonable income.

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How to Report Itemized Deductions to the IRS

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