Tips For Avoiding An IRS Audit
The IRS recently announced that it would step up the number of audits it performs on income tax returns, reversing a trend toward lower audit numbers that's characterized the last five years. Deborah Fowles provides nine tips to lower the chances of the tax man knocking on your door:
1. Make sure all the math calculations on your return are correct.
2. Compare your deductions to averages for others in your income bracket. If some of the items you claim significantly exceed the average, attach an explanation or copies of documents to support them.
3. If you file Schedule C (for self-employed), your chances of being audited rise sharply.
4. Taking a home-office deduction will increase your chances of an audit.
5. Be prepared to substantiate your return with complete records.
6. If you can't file your taxes by the filing deadline, be sure to file for an extension.
7. If you report income differently than it was reported to you on a form 1099, attach an explanation.
8. Be sure to sign your return.
9. Be pro-active. If you have a large deduction such as medical expenses, attach copies of the bills to your return.