This happens very rarely, but it does happen to some people. What am I talking about? I am talking about the dreaded IRS audit. Only around two percent of people are going to get audited, but there are factors that are going to increase or decrease your risk of getting audited. Not all audits are a total drain to the wallet, but here is how to prevent your tax return from getting an IRS audit.
The first thing you need to do is to make sure that all of your information is accurate and correct. Everything from your name to income needs to be correct. Make sure that everything that is on your W-2 is accurate and correctly copied. This is generally a red flag for the IRS that they might want to keep searching your return for other errors that could lead to more money for them. This is the easiest thing to do to just make sure all your information is correct!
Another good tip is to use software like TurboTax to ensure that your tax return doesn’t get audited. They will help you eliminate most of your errors and will double check all your information for you. They even offer a service where they will take on the IRS for you if you happen to get audited for some reason. However using software cuts down on human error and making mistakes on deductions or missing taxable income.
Do you work for yourself? Make sure that you keep records of everything that you are going to be deducting. If you are taking a deduction for a laptop, you should keep the receipt for that laptop. This way you can remember what everything cost, and if the IRS audits you, you can prove you made that purchase and get them off your back. Having receipts also helps because using round numbers tends to tip off the IRS that you might be guessing on a deduction and you will have the correct amount that you spent on hand.
The home office deduction and general expenses from running a business is another big IRS target for audits. If you have an expense make sure you document it. Experts say that if you deduct more than 52 percent of your overall business income that you are more likely to be audited. If the deductions make a difference than you should take them, but if not, you should probably consider letting it go for now.
If you want to prevent audits just make sure that all your information is accurate. Report all your income and don’t think that the IRS can’t find out about it. While audits are generally rare, you should never assume that you are going to be safe. Play by the rules and no one gets hurt in this case.