Although being audited is unlikely, it can still happen and you do not want to be one of them. Sometimes the IRS audits at random but on other occasions it is because they have spotted an inconsistency in your returns. To avoid this and lower your chances of getting into trouble with the IRS, be mindful of these tips.
- Report all income – Be sure that ALL your income is reported, not just the money you have made from your job or employer. Any money you have acquired needs to be reported on your forms.
- Hire an Accountant – We are happy to help and are able to field all your questions while also making sure that all of your income and deductions are reported properly. The less error, the less chance of being audited.
- Do not round your figures – Perfect numbers where you have spent exactly $200 or have earned exactly $50,000 catch the IRS attention since it is highly unlikely that this is the case. Be sure to document down to the penny of how much you spent or made.
- Check your math – This is super important since simple math mistakes can throw off all your numbers. Check your math and be sure that everything is added and subtracted as it should be and that your figures make sense.
- Back up Deductions – It is important to make sure that all of your deductions have appropriate support in order to prove that the deductions are actually valid. This includes receipts, odd figures and low income catch the IRS eyes.
- File on Time – Filing late is a red flag, amended tax returns go through a screening process and tend to be audited more often than returns that are filed on time.
- Document Alimony Payments – Alimony payments are considered taxable but are considered deductible if certain expectations apply. To get the entire list, check the IRS website.
- Be Careful when Claiming Business Use of a Vehicle – Chances are you do not use your vehicle only for business purposes, unless you have a separate vehicle all together. When you use it as a deduction be sure you have proper documentation that proves that the vehicle was used solely for business purposes.
- Be Thorough and Meticulous – Check all of your documents and returns to ensure that they are as accurate as possible. All numbers should be accurate and make sense, as well as deductions. Be sure that ALL income is reported and any money you acquired is accounted for. The less mistakes the better.
We are a team of Tax Attorneys, CPA’s and Enrolled Agents with over 15 years of experience in Tax Audit Representation. Erez Solomon, our CEO, is a lawyer license to practice in Israel and has a background of international taxation and tax law. Give us a call today for a free consultation.