Worried About an IRS Audit? 7 Saviour Tips You Need
The very idea of undergoing an audit by the IRS can be quite intimidating for a lot of folks. The central idea behind IRS audits is to double-check the information provided by an individual. There should not be any difference between taxes owed and taxes paid. There is a silver lining to IRS audits as well, as only less than 1% of all tax payers get audit notices during a financial year. If you are genuine with your tax filings, there is nothing to worry about, even if you are being audited.
You can certainly reduce the chances of being on that less than 1% list by keeping the following in mind.
Try to avoid doing anything that might put some sort of suspicion in their mind.
File your returns
This seemingly obvious option is at times ignored by people. Not filing returns brings you under the radar of IRS. There might be instances where you did not have any income for the previous year. You would still need to file your returns to show that you did not pay any taxes, because you did not have any income source for the year in question.
Bring clarity on the table
Messy handwriting and document filing can also bring you into IRS’s limelight. If the IRS is unable to read your tax return, you might draw their attention. Try to stay away from any such situations. It is better off to be one of the million people whose documents just sail over, than coming under audits.
Get your Maths straight
The theme of trying to avoid drawing any attention continues here as well. Make sure you have your calculation accurately. There should not be any room for error. The easier way out is to use software or file your taxes online. That way the chance of making errors reduces drastically. But if you are filling up forms offline, ensure that the proper boxes have proper data set. And most importantly double check that you have signed the tax return.
Knowing the targets
Professions where you deal mostly with cash or maintain your own book, chances of being under audit are relatively higher. For example profession like hairdresser, lawyer, accountant etc. might generate more friction in the IRS department. You need to be very clear with your return filing and specially the deductions.
Do not Forget information
Failing to mention any income from any front or omitting information can turn the tides against you. No matter how small the value is, missing it can prove to be expensive. The reason being, that IRS is most probably aware of that. And its absence from the tax returns would draw attention again.
The selection process
It is essential to understand the selection process to know your probability of making into or out of it. To a normal eye the process looks to be pretty random. But internally, IRS uses software to compare your deductions with those in your bracket. This is not meant to intimidate you, rather the take away point is to have as much documentations as you can.
Where it is your paranoia or something else that makes you feel you might be the chosen one, it is good to have documents. Additional documents such as forms, receipts for events, worksheet etc. will definitely come in handy in such times. Providing sufficient documentations ensure that even if the software flags you, an IRS agent can comprehend your return and let you off.
There is no guaranteed way to keep you away from IRS audits, but taking some of these precautions can help you reduce its probability.
Even if you are under audit, having sufficient evidence for each description will aid you to get through.