Every year one person out of a hundred is tapped for an Internal Revenue Service audit, and it generally leads them to be fearful about the prospect. While there isn’t anything you can do to guarantee you won’t ever be audited, there are some things you can to lower your chances of being informed of an impending IRS appointment.
In the past, audits were determined by individuals who worked for the IRS but now a computer selects the people that will be audited. Normally audits will be generated due to the amount of some deductions or the types of income an individual reports. Audits can also be generated because of mathematical errors or missing information.
To avoid the possibility of being required to complete an audit, it is important to check all numbers on your tax form. Verify the income amounts reported on your W-2 form or 1099 to ensure they match the amounts you received over the course of the year. You can ask your employer to provide a new W-2 or 1099 if you find errors.
If you’re doing your taxes yourself, double and triple check your addition and subtraction. You may also want to have your partner or someone else you trust to check your math. This will ensure you haven’t made any mathematical errors which could trigger an audit.
Having a professional accountant do your taxes each year may help keep you from being audited. At least if you are audited, they will be with you when you face the auditor to explain your tax return and why deductions were taken as they were.
Another way to avoid being audited is by filing Married Filing Jointly rather than Married Filing Separately if you’re married. Married Filing Separately returns are often flagged because deductions are often doubled or have other inconsistencies.
Attach copies of medical bills if claiming large medical deductions. In fact, any time you’re claiming medical deductions, it’s important to provide supporting copies. It would also be a good idea to substantiate every deduction claim with copies.
Home business owners may trigger an audit if their deductions or business expenses seem exaggerated when compared with their reported income. While the IRS will not announce the exact ratio that will elicit further scrutiny, having documentation for every deduction will mean you’ll be prepared if you should be audited.
What do you do if you do receive a letter informing you you’ll be audited? Rather than trying to handle the audit on your own, get an accountant to help you. They are more familiar with how the IRS works and what documentation they’ll need.
These are some things you can do to avoid being audited. As already stated, there’s nothing to guarantee you’ll never be audited, but following these suggestions can make the likelihood much smaller.
