Individual audits are extremely rare in today’s time, because the population is so great and there are so few IRS agents. However, while audits might be rare most people would probably like to avoid getting audited altogether. With that being said, any IRS agent can tell you that the number of audits each year is actually increasing.
While they are rising slowly they are rising nonetheless. This means that there is a chance that you could be audited. Once you are scheduled for an audit there is not much you can do to stop it. Your best bet is just to bite the bullet and hire a tax attorney. You can, however, lower that chances that you will be singled out in the first place.
Below, you will learn some tips and valuable information that will help you avoid the chances of being singled out for an audit.
Double-Check Everything :
Leaving errors and mistakes in your tax returns is one of the most common red flags that are spotted by auditors. While this is something that is completely preventable, you would be surprised at just how many people are too careless to double-check their returns. It is best to gather all your income reports, banking statements, and other financial information, before you start filling out your taxes.
This way you can always be 100 percent sure that you are entering the correct information. Hiring an accountant to deal with the matter can greatly reduce the risks of errors, but professionals sometimes do make mistakes, as well.
While it may only seem like common sense to a lot of people, being 100 percent truthful on your tax returns is necessary to keep the auditors at bay. Always report the realistic amount of income, deductions, credits, and other information. If you try to hide a large sum of cash when you are making six figures a year, there is a good chance that you are going to get caught. If you try to report enough deductions to cover your total pay, there is a good chance that you are going to get audited.
With all the opportunities online today, there is a lot of people starting their own online business. This is great and exciting, but you should know that self-employed people have to file as a schedule C, which greatly raises the chances of being audited. If you are one of these self-employed individuals, you should consider incorporating yourself or signing up for an LLC (limited liability company) license.
Any small business owner should know that small businesses are the favorite targets of the IRS, so ensure that you are keeping good up-to-date records. Having a professional deal with your taxes might also be another great solution.
Just about any tax professional will tell you the later you file your taxes, the less likely you are going to get audited. Some professionals will even suggest filing extensions as most of the audit choices have already been made by this time.