How to Avoid Being Audited
Tax season is one of the most stressful times for many taxpayers because of the fear of getting audited. The following are some steps to prevent this from happening regardless if you are filing as an individual, small business owner or large corporation.
First: Keep it neat
Avoid turning in a handwritten return because appearance is vital. Your return should look as though you had it prepared by someone who has paid attention to detail. You can do this by using a professional tax firm or a computer program to file your return, giving it a more put-together look.
Second: Math errors
The number one error the IRS comes across is math errors. Always double check your math computations to avoid discrepancies in final answers. Computer programs are a definite solution for this problem.
Third: Report all income and gains
It is very important to report all income from all W-2s and 1099 forms because the IRS automatically gets a copy of every form filed by your employer and brokerage firms. If one form is missing, it sets off a red flag. There are other gains to report such as: gambling wins, jury duty, sale of a property or piece of security (saving bonds). All these gains affect your income tax return results.
Fourth: Avoid the excessive use of deductions
Home office and business expenses are also red-flag warnings. There is no problem claiming expenses as long as you have the proper documentation to support your claims. If you are not sure what is a deduction, consult with a professional income tax consultant. These deductions are self-explanatory and easy to identify.
Fifth: Check your return
This may seem like common sense and as a result, many errors are caught while reviewing your tax return. Always double-check all details: math computations, individual details (SSN number) and do not forget to sign the return. These errors may not trigger an audit, though a rule to remember is, the less correspondence you have with the IRS, the better.