How many deductions is too many?

Question

If I put $27000 of my $40000 taxable income in my tax deductible accounts, and the standard deduction is $12,500 leaving $500 taxable income for the year, is that risky for tax audits in any way? I mostly live on my tax-free stipends as a traveling worker.

CoryF · Answer

Thank you for this reply, Jillerino.

Withholding the max amount of 401k contributions is a known and accepted strategy by the IRS to reduce your gross income. The HSA contributions are also known and accepted as well. It is correct, that these values will be reported on the W-2 and combined with other income sources, you may not have to file a tax return. You can use this resource to confirm this possibility.

JohnW · Answer

I'm unsure of what you mean by $23000 in employer 401k, $4115 in HSA, but if you feel as though those numbers might flag an audit, those are reported on the W-2, which is reported independently to the IRS by the employers,

Where there would be an issue is if your reported amounts contrary to those reported by the employer.

As a practical matter, it's prudent to match up your pay information throughout the year with your W-2s and ask your employer if something doesn't seem right.

Jillerino · Answer

https://community.freetaxusa.com/discussion/comment/3489#Comment_3489

$23000 in employer 401k, $4115 in HSA