How to Avoid an IRS Audit
While there is certainly no guarantee to avoid a tax audit from the Internal Revenue Service, there are several steps you can take to lessen your chances. Currently, the IRS estimates that they audit just over 1 in every 100 Americans whose income is less than $200,000. The IRS chooses some returns to audit at random every year, but they also focus on returns that have certain “red flags” that make your return more likely to get a closer look.
1. Choose your tax help wisely – if the IRS suspects that a certain tax professional is not submitting accurate returns for their customers, they may actually audit ALL returns that have been handled by that tax professional. If you are looking for help with your taxes, consider a reputable company like Success Tax Relief, who has an ongoing working relationship with the IRS and a longstanding track record of solving tax problems, not causing them.
2. Individuals who are self-employed and file a “Schedule C” rather than a corporate return are many times more likely to be audited because of increased rate of inconsistencies in their tax returns.
3. Be careful with your deductions – one big red flag for the IRS is when an individual gives a large amount to charity, especially if this deduction is high compared to your annual income. This does not mean you should not take the deductions you are entitled to, just make sure that you have back-up documentation in case you need it.
4. Take your time with your taxes – the more mistakes in your return, the more likely you are to receive an audit. So, it is always a good idea to double check your tax return before submitting it.
5. Report all of your income – if you do not receive a W-2 from a corporation or income source, request it. If the IRS receives notice of income you have received but not disclosed on your taxes, your audit risk is immediately heightened. In the case of taxes, honesty is always the best policy!
6. E-File: Statistics show that e-filers are actually audited less than those who mail their taxes in. So, take advantage of this convenience and consider filing online.
If you are in a situation in which you receive notice of an audit from the IRS, do not panic. Your first step is to gather all of the documentation related to the tax return in question (audits most often occur within 3 years of filing a return).
Next, you may want to consider partnering with a tax firm experienced in dealing with audits. Success Tax Relief has more than 30 years of extensive experience managing all kinds of IRS audits – from simple to difficult, personal or business and we often resolve these very quickly and easily. Audits can be stressful and require a high level of detail, strong communication with the IRS and patience. Success Tax Relief can take this stress away.