Although the percentage of people who will undergo an IRS audit has gone down, there are still hundreds of thousands Americans who will be audited this year. Even if you've done everything right, an audit is no fun! Use these tips to cut your chances of being audited!
- Don't cheat. To avoid an IRS audit, make sure you are following the spirit of the law and not just looking for loopholes. Don't declare business expenses when the expenses are actually for pleasure. Make sure that your deductions to charity are legitimate. Don't declare any deductions that might cause someone suspicion.
- Make a good impression. Make sure that all of your papers are neat and clean, all of your attachments are where they should be, and you have signed and dated in the appropriate areas. To avoid an IRS audit, don't give IRS personnel any reason to assume that you are cutting corners.
- Declare exact - and correct - values on your contributions. Try to get exact values on all non-cash contributions to avoid being audited by the IRS, and figure out exactly how much you have contributed to charity. Rounding numbers or making up obviously false numbers is a dead giveaway to the IRS.
- Report all of your income. Make sure that you are reporting all the income that will be reported on other forms that the IRS receives. Not reporting your income is a red flag to the IRS and a great way to be audited on your taxes. This includes interest, miscellaneous income, and dividends that are reported on a 1099 form.
- Declare your tips. If you work in a profession in which it is common to receive tips, the IRS will be looking for tip income to be reported. Failing to do so may trigger an audit.
- Compare your deductions. Comparing your deductions to the national average can show you if you are at risk for an IRS audit. To avoid an IRS audit, make sure you don't have deductions that are far above the national average.
- Don't start a pattern of being audited! Once you have been audited by the IRS and had any deficiencies found, you are more likely to be audited again, so try to avoid any first IRS audit!
- Use an accountant. If you have any misgivings about your taxes, it is better to use the services of an accountant, who knows the workings of the IRS much better than you are likely to! Although you'll pay more than doing your taxes yourself, it's worth it if it saves you worry.
As with many things in life, if you are dreading your taxes, enlist the help of a professional. Taxes can be a pain, but they shouldn't make you miserable!