Five Ways to Reduce Your Chances of Being Audited
With tax day looming large and the IRS preparing their proverbial red pens, you may be a bit concerned about being audited. Just the word "audit" is enough to send tingles up the spine, but it really isn't as dire as it sounds. As long as you are honest and careful, then you should have nothing to worry about. Besides, your chances of ever being audited are extremely slim.
Despite these words of comfort, you are probably still very eager to keep a low profile as far as the IRS is concerned. The following five tips should make that slim chance of an audit even slimmer.
- Be Truthful - That's a polite way of saying, "For Pete's sake, don't cheat on your taxes!" It's not worth it in the long run and though you may think you are being very clever, the IRS is even cleverer. When numbers don't add up because you are purposely fudging documents, you can bet some alarms will eventually go off on their end.
- Consider a Professional CPA - You may be in a situation where your taxes can be filled out on an EZ form with little complication. If that is the case, by all means, file your own taxes. However, if you are self-employed or have multiple deductions, it may be worth the investment of turning over your burden to a trusted CPA.
- Don't Go Deduction Crazy - Sure, deductions exist for a reason and are legitimate ways to save some money. However, deducting everything under the sun, particularly large entertainment expenses, will make you more noticeable to the IRS.
- Don't Use Offshore Accounts - Tax shelters, offshore trusts and offshore credit cards are major red flags for the IRS. It is easy to hide assets this way, which makes the IRS a bit more scrutinizing.
- Avoid Large Changes in Income - Obviously, this isn't something you have a great amount of control over. However, a large increase or decrease in income makes you more susceptible to an audit. The IRS monitors most returns with a computer system, which automatically detects when things seem out of the norm.
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