One of taxpayers’ biggest worries is being audited by the IRS (Internal Revenue Service). Even if you are sure that you’ve properly filed your taxes, in the back of your mind, you think yourself when you’re going to receive a phone call or letter from an IRS representative. You can worry a little less this tax season. Here are some ways you can avoid a tax audit.
Certain types of taxpayers are more probable to be audited than most people. This also includes taxpayers who acquire more than $200,000, small business owners and self-employed taxpayers, and taxpayers who could be hiding taxable income overseas.
Make sure you check your math. Common reasons for tax audits are simply addition and subtraction errors. They are also simple to fix and avoid. Check and re-check your numbers to make sure you have included the right ones.
Using tax preparation software such as TurboTax or H&R Block can eliminate math errors that sometimes lead to an audit. They can also analyze your tax return to let you know any items that could trigger an audit. Be aware that even tax software can not thoroughly eliminate your chances at being audited since the IRS computers audit a number random taxpayers each year.
The IRS software checks to make sure the income reports on the 1099s it received for your social security number adds up to what you reported. Disagreements could trigger an audit. If you think the total on your 1099 is a mistake, contact the issuer to have it fixed. If that isn’t successful, you should contact the IRS by calling 1-800-829-1040 for assistance.
File at the last minute if you can. The IRS gets numerous returns on April 15th and can not scrutinize them the same way returns that are filed on February 1st might be. That isn’t to say you are able to avoid an audit all together by filing later. You just minimize the risk.
Report any sources of income including child support, alimony, and cash receipts. Child support and alimony taken in will be bound to your social security number, so the IRS will know about it already. Though you may assume getting paid under the table will prevent you from paying taxes, the IRS can find out about cash receipts. For example, if you put cash into your checking account, an audit will raise the question of where the money came from.
File your income taxes. You are legally required to pay your taxes regardless of what you feel about having to pay them. Not paying your taxes is a crime and if you get caught, you will have to face criminal charges and financial punishments. On top of that, you will need to repay the taxes you should have paid in the first place.
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