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.

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
Should you ever receive a notice from the IRS, chances are you may have already been audited. Very few people are put through the ringer by the IRS and, assuming you are being honest, you have very little to worry about.
Heather P. Johnson is a freelance writer, as well as a contributor for Credit Card Lowdown, a site for finding credit card reviews. Heather invites your comments and freelancing job opportunities at her email address: heatherjohnson2323@gmail.com.
Article written on April 4, 2008 8:34 AM

Send a comment to Dave Taylor
Syndicate This Site
RDF XML
All Weblog Entries


Personal Finance Articles

This site is intended to offer resources, not legal advice.

site map or tech support or business blog ||