Tax Day is still a few months away. That has many Americans nervous about the dreaded “A” word. Although the word “audit” fosters anxiety for many, the chances of being audited are low for most Americans. However, you can still reduce those odds. Here are five ways to avoid getting on the IRS’ radar:
Check your math! Mistakes happen, but before you submit your tax return, be sure to double and triple check your numbers to make sure you didn’t accidentally write a 3 when you meant to write an 8. While you might not be audited for a simple mathematical error, you don’t want to alert the IRS that you’ve carelessly prepared your return.
Don’t omit information. Account for every single source of income, from a temporary freelance job to stock earnings. Failing to report income, regardless of the amount, could be a red flag. People and businesses that pay you, whether in the form of a salary, dividend, or something else, report those payments to the IRS. So, the IRS already knows about them and expects to see them on your return.
Provide documentation. Deductions that are disproportionate to your income tend to attract attention. But don’t be afraid to claim your expenses and charitable donations. There’s no need to overpay the IRS, just make sure you have proper documentation for all your deductions. Include copies of receipts, payments, bank and credit card statements, bills and other materials that will validate your deductions, especially when it comes to home offices, travel, meals, and entertainment expenses.
Be exact with your numbers. Rounding numbers is for school-aged children. When it comes to tax preparation, use exact numbers. While it’s possible to occasionally pay an expense that’s a perfect number, IRS auditors know that’s a rarity. If you must round a number, round to the nearest dollar, not to the nearest hundred or thousand.
Hire a professional. While there’s no guarantee that a professionally prepared tax return will prevent an audit, it’s certainly helpful to have a tax professional prepare your taxes, especially if your personal financial situation is complicated or you own a business. A tax professional can make sure a complex return is filed correctly, which may help keep the IRS from tagging your return.
No matter how many precautions you take, there’s no way to guarantee you won’t be selected for an audit. Use the tips above to minimize your chances. If you’re concerned some part of your return might raise an eyebrow at the IRS, Boris Benic and Associates can provide you with the expert tax audit help you need. Our specialists have a wealth of experience to address almost any situation.