When filling out your tax returns, you want to make sure they are filled out properly. The one thing you want to avoid is an audit. It's not that you have done anything wrong, most likely you have filled them out accurately so if you are audited, you won’t have any problems.
But what we don’t seem to understand is that the audits are not always due to an error on your filing, it could be triggered by the IRS. Others are selected by the computer and at times some are red flagged so that will draw the IRS’s attention.
Since this is something we truly want to avoid, then we should make sure that we minimize our exposure. The forms should be clear and well documented. When filling your taxkes, make sure you have all your back up for deductions in order. Once they are completed always check them again. If you are concerned that they may not be correct, have them checked by a professional. Many times they will catch a mistake and not only that, they can find deductions in your favor. There are deductions that you are not aware of. Here are a few things that you can do to avoid an audit.
TAX PREPARER
When choosing a tax preparer, make sure it is someone legitimate. Some of the agencies do charge quite a bit but at least they know what they are doing. Don’t just let anyone fill your tax papers. There are times they will write down deductions that you can’t back up later on. Do everything by the book, its better that way.
DON’T BRAG
Whatever you do on your taxes, keep it to yourself. Don’t brag about anything that you received or what strategies you use. Nowadays, they offer rewards to whistle-blowers. They can use it against anything they may have, such as fines, penalties or owed taxes.
IRS HIT LIST
If you have had run-ins with the IRS, you will definitely be red flagged. They will be looking for your tax returns. Make sure they are correct, in order and nothing is left out or added in by mistake. You don’t want another audit.
NUMBERS
Make sure to check your numbers. It’s easy to make a mistake when adding or subtracting. Read all instructions and go over the numbers again. It won’t hurt to make sure they are correct.
BUSINESS EXPENSES
Don’t mix your personal expenses with business expenses unless it really is a business. You will have to have something to substantiate this.
BE SKEPTICAL
If it sounds too good to be true, then it is. Don’t adjust your numbers in order to get a good tax refund. If someone tells you, here is a way to pay less to the IRS and you know it’s not legal, don’t do it. It’s true; some have gotten away with it but why play with fire?
EARNED INCOME
For those that earn more than $100,000 a year are at a higher risk of an audit. Now that you know this, make sure to keep adequate records to back up any deductions you may have made. It would be nice if we didn't have to pay taxes at all but then how would our country survive. The actual percentage of audits has lessened with the years. In the past, the wealthy were able to get away with just about anything. At least now you know that no matter whom you are, you will pay your fair share.
The good thing about this is that you only have to file taxes once a year. If they are done right you don’t have to think about them again until the following year. Remember you have until the 15th of April to get them in. The faster you do them, the better for you.