How to Reduce Your Chance of Being Audited by the IRS

There is no way to be 100% sure that you are not going to be audited. However, there are ways that you can lower your chance of being audited. Today, we are going to share some audit protection tips that will help ease your mind about the IRS auditing you.

Use Your Computer to Prepare Your Tax Return

The IRS finds computer prepared returns to look more official and they actual favor those who process their returns via computer. If you go to a profession tax preparer, you will find that they use computers.

There are programs that allow you to prepare your own taxes, while still receiving the professional look, such as, Intuit’s TurboTax. Not to mention that if you use Turbo Tax you can prepare your return online. In the event that you do not have access to a computer, you want to make sure that you print out the information carefully.

A messy return is a great way for you to be audited because the IRS views you as being careless and disorganized.

Do Not Round Deduction Numbers

You should use exact numbers for deductions and never round them. When you round your deductions, you are letting the IRS know that you are estimating things and you do not have records to back up your deductions.

Large Deductions Should Include Documentary Proof

If you claim large deductions for things such as natural disasters, it is important to make sure that the back of your tax return contains the documentary proof to back up these deductions. You should have copies of your receipts, cancelled checks, pictures, insurance reports, and any other documentation you have.

This will not stop the IRS from auditing you but the documents will be brought to the attention of the IRS classifier who screens computer-picked returns for audit potential. In the event that your documents look legit, you will not be audited.

Avoid Filing Schedule C with a Net Loss from a Small Business Venture

If you are filing a Schedule C, Profit or Loss for Business, that shows a net loss from your small business venture you are at risk of being audited. The IRS auditors love going after these types of returns.

Report Your Side Income as Other Income

Side income should be reported on line 22 of your tax return. This should only be done, however, if the income is small, and you do not plan to claim any business deductions. Technically, this income should go on Schedule C but when you file a Schedule C, your chances of being audited are increased.

Do Not Use Electronic Filing or the IRS Preprinted Address Label on Your Tax Return

By electronic filing or using the IRS preprinted address label on your tax return, you are making it so your tax return enters to processing cycle much quicker. However, when you electronically file or use the label your refund does come faster. However, if you think you are going to be audited this may not be a good thing.

Reside in a Low Audit Area

The chances of you being audited depend on where you live. For example, residents of Nevada are audited four times more than people in Wisconsin. When you move to your new address to reduce the chance of being audited, it can be beneficial for you to use several different addresses if you travel a lot. You are in control of choosing your tax reporting address so you should go with the one located in the lowest audit rate location. Your tax pro or IRS office can provide you with more information on this.

Turning to TurboTax for Help at Tax Time

When you turn to Turbo Tax for help it will be like an interview. They will ask easy to answer questions while filling in the correct tax forms for you behind the scenes.

The answers you provide will enable them to see which deductions and credits you qualify for. In the event that you are unsure how to answer a question there are tax experts readily available to help you.

Turbo Tax provides you with step by step instructions to insure that you get every deduction and credit that you are eligible for. Turbo Tax insures that you get the largest refund possible. They even have a free tax refund calculator available that allows you to know the amount of money that you will be getting back.

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