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Tax Audit Red Flags: 11 Things That May Get the IRS to Pick You

Cassandra Hubbart, DailyFinance
By Blake Ellis, @CNNMoney

Worried about a tax audit? You don't have to be.

Audits are avoidable, and it's not just about following the rules. From outlandish charitable giving to working in your own home office, you could be singled out if you hit a nerve with the Internal Revenue Service. Here's what the IRS looks for and tips to help you avoid getting chosen.

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Cities with the Lowest Tax Rates

The total amount of tax you pay reaches far beyond what you owe the federal government. Depending on where you live, most likely you're required to pay additional taxes, including property and sales tax. The disparity between the amount of tax you pay in a low-tax city and that in a high-tax city can be dramatic. Living in any of these 10 cities could save you a bundle, although the exact amount may fluctuate based on your income and lifestyle choices.

Cities with the Highest Tax Rates

Much ado is made in the press about federal tax brackets, but cities can carry a tax bite of their own. Even if you live in a state that has no income tax, your city may levy a variety of taxes that could eat away the entire benefit of living in an income tax-free state, including property taxes, sales taxes and auto taxes. Consider all the costs before you move to one of these cities, and understand that rates may change based on your family's income level.

Great Ways to Get Charitable Tax Deductions

Generally, when you give money to a charity, you can use the amount of that donation as a deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.

A Freelancer's Guide to Taxes

Freelancing certainly has its benefits, but it can result in a few complications come tax time. The Internal Revenue Service considers freelancers to be self-employed, so if you earn income as a freelancer you must file your taxes as a business owner. While you can take additional deductions if you are self-employed, you'll also face additional taxes in the form of the self-employment tax. Here are things to consider as a freelancer when filing your taxes.

Tax Deductions for Voluntary Interest Payments on Student Loans

Most taxpayers who pay interest on student loans can take a tax deduction for the expense ? and you can do this regardless of whether you itemize tax deductions on your return. The rules for claiming the deduction are the same whether the interest payments were required or voluntary.

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Extremely charitable is a mistake?

April 15 2012 at 8:02 PM Report abuse rate up rate down Reply

We got audited because we rolled over some money and the company we rolled the money to didn't report the rollover to the IRS. I almost had a heart attack when I received the IRS letter. At least the agents were pleasant to deal with.

April 15 2012 at 10:02 AM Report abuse rate up rate down Reply

Why is it if you owe the IRS, they penalize you and charge you interest? My b/f is getting a refund back, but the IRS has been sitting on his check for over 2 months now. There has to be someone out there who can go up against them.

April 15 2012 at 6:39 AM Report abuse +1 rate up rate down Reply
1 reply to Hoosierladyus48's comment

LADY... B/f simply paid the crooks too much withholding over the year... very costly. If he adjusts w/h, he'll have more spendable $$$.... the IRS preys on ignorance.

April 15 2012 at 8:39 AM Report abuse rate up rate down Reply

thousands of well armed government employees are all too willing to help releive you of your property

April 14 2012 at 12:17 PM Report abuse +1 rate up rate down Reply
Carol & Jay

They got me bent over the barrel again this year...

April 14 2012 at 11:32 AM Report abuse +2 rate up rate down Reply

crap im screwed

April 12 2012 at 6:30 PM Report abuse +1 rate up rate down Reply


April 12 2012 at 5:51 PM Report abuse rate up rate down Reply

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April 12 2012 at 4:45 PM Report abuse -1 rate up rate down Reply


April 12 2012 at 4:42 PM Report abuse -2 rate up rate down Reply


April 12 2012 at 4:42 PM Report abuse -2 rate up rate down Reply