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Does an increased personal income tax loss increase the likelihood of a tax audit?

TM
2024-06-26

Question

Hello,

This year, I will be recording a small loss on my personal income tax return.

Like everyone else, I want to avoid a tax audit. I have nothing to hide, but I have often heard that it can be quite unpleasant and time-consuming.

My questions:

1. Can reporting a loss on my personal income tax return increase the likelihood of a tax audit?

  1. Is this also the case if the combined return with my wife does show a profit (my wife’s self-employed activity will be positive)?

    If the answer to both questions is yes and the chance of an audit is therefore higher, I will simply not record some expenses to avoid a loss on paper. I will then pay slightly more taxes (I estimate around 200 euros), but I think that is worth avoiding a tax audit.

Thank you for your help!

Hello,

Making a loss is not tax fraud. It is normal to make a loss, especially in your first year.

If you make a loss in consecutive years, you may indeed be subject to a tax audit.

If you file a joint return with your wife, your loss will first be offset against any other professional income you may have. After that, the loss will indeed be offset against your wife's profit.

I see no reason to avoid your loss if all of this is correct.

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