Number Four of the Eight Small Business IRS Tax Audit Areas to Watch Through 2013

While statistically, the odds are in your favor not to get audited, there is always a risk that you can get audited.

As we wrote about in our last three posts, the IRS continually analyzes compliance levels for entities, issues and industries by conducting hundreds of compliance projects and initiatives each year. The IRS has announced emerging or significant areas that it will prioritize for the coming year.  Look out for our next four posts for the remaining audit areas.

Fourth target area for IRS tax audits:                 
Credit for small business employee health insurance, under Section 45R. This credit, first available on 2010 returns, is now coming under IRS scrutiny. The IRS will examine small business employers and tax exempts for compliance with Section 45R eligibility requirements.

Make sure you understand this credit before using it.  To be eligible, you must cover at least 50 percent of the cost of single (not family) health care coverage for each of your employees. You must also have fewer than 25 full-time equivalent employees (FTEs). Those employees must have average wages of less than $50,000 a year.

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