Reduce Your Risk of an IRS Audit

Reduce Your Risk of an IRS Audit

We all know and respect the importance of paying our taxes on time, but the process of accurate and accessible record keeping is essential in the event that your name is selected for an IRS audit. And although it is less than 2 percent annually that face an IRS grilling, you never know when your number is up and you must produce your tax documentation. To avoid an unnecessary conflict, be sure to take sound measures each tax year and keep your bases covered. The IRS tax audit need not be a frightful confrontation when you have everything saved for verification.

1. Keep your itemized deductions to the bare minimal as to avoid an IRS comparison to others in your tax bracket. Meals, transportation, business gifts, etc are all viable deductions, just be sure you have not exaggerated this process for personal expenses.

2. Keep accurate records of your deductible mileage to ensure that you did not claim any overage unaware. Check with the IRS publications for the current cash deduction per mile and be sure you stick like glue to the rules. Mileage is very difficult to prove should there be a charge of mistake or fraud against you.

3. When claiming a deduction from a loss of business income, be sure you have kept all the paperwork, bills and receipts to present at tax filing time. And although you did show documentation at the time of filing, these documents are vital to shelter you from a later investigation, especially when dealing with large dollar amounts.

4. To avoid a sticky situation with an IRS audit, be sure to answer all their correspondence as soon as possible. If you receive information by mail, fill it out quickly and return it. If you are asked to come into an IRS audit office, set your appointment immediately. And if you are approached with a field audit, or an agent showing up at your home or workplace, be sure to cooperate to the best of your abilities. The IRS will not go away if you put your head in the sand, and contrary to popular belief, most IRS agents are able to work with you and do show respect to the tax payers.

5. To help you stay under the radar, be sure that all your basic information is correct and consistent on every tax form. The IRS may be alerted when important numbers are out of place, such as an error with your social security number or a typo with your birth date.

If your name is selected for an audit, be as straight forward as you can with the IRS agent. That means owning up to mistakes and doing all they ask of you regarding the necessary documentation. However, in the event that your circumstances seem overwhelming, don’t hesitate to call upon a tax attorney that specializes in dealing with the IRS. Such services may be able to lower your tax bill and settle your claim for less while upholding the strictest letter of the law.