How to keep lid on an IRS Audit!

There are many signals that send up a red flag when the Internal Revenue Service is combing over your tax returns.  Many of these red flags are seemingly innocuous things, but they could result in your getting audited.  So, it is best to avoid sending up these flags if you want to help prevent the Internal Revenue Service from auditing you.

·Make certain you collect all necessary documentation.  Things like missing receipts or forgotten W-2s are going to set off signals to the Internal Revenue Service.  Make certain that you have all the necessary paperwork to support your deduction and tax credit claims in the event you are asked to produce them.

·If you are in business, make sure that your business deductions are reasonable.  If your itemized deductions list is too long or contains items that could be of personal, rather than business use, the Internal Revenue Service may become suspicious and decide to audit your business.

·Make certain that the income figures on your forms are exactly the same as the income you list on your income tax return.  If these figures don’t match, it could make the IRS curious.  While this mistake itself, is unlikely to trigger an audit, combine it with another mistake like a missing W-2 and it will probably get you an audit.

·Include all gambling winnings, contest earnings, and cash gifts.  If you “forget” any of these, you will probably face an audit.  Remember Richard Hatch from the “Survivor” television series?  He “forgot” to claim his one million dollar prize and went to jail.

·Be honest with the numbers.  Unrealistic charity deductions and a lot of round numbers when it comes to itemized deductions are dead giveaways that something isn’t right.  Take every deduction and tax credit to which you are entitled but don’t try and “fudge” numbers to get ones you don’t deserve.

·Be frugal with your purchases.  The more high-end items you purchase and claim on your income taxes in a given year, the more attention you will attract.  Perhaps it would be wise to be more prudent in your spending habits, for the sake of your taxes and your own budget.

·Be meticulous about your return.  Check over your income tax return and double check the math, as many times as need be in order for you to be 100% certain that everything is absolutely accurate.

·Consider hiring a professional to prepare your tax return.  If you have a lot of deductions or interest credits and the like, it may be wiser to hire a professional to do your income tax return than to do it yourself.

Anyone can get audited at anytime.  There is no full proof way to avoid it.  But certain precautions, like the ones we’ve discussed, can make it less likely for the Internal Revenue Service to sit up and take notice of you income tax return.