When you get an audit letter in the mail, the feeling is akin to finding out you’ve come down with a very bad flu.
No one wants to be audited.
Luckily, there are ways individuals and companies can reduce their chances of getting audited. If you want to avoid that sinking sensation that comes with the letter from the IRS, here’s how.
5 Ways to Avoid Getting Audited:
The IRS chooses individuals or companies to audit based on the filing information for others in that bracket. If you stand out from the crowd, you’re more likely to get audited.
Understanding how the IRS chooses its victims is integral in avoiding an audit. Here are five specific things you can do to avoid the scrutiny.
1. Recognize Popular Targets:
There are certain types of individuals the IRS tends to audit more:
- The self-employed
- Small businesses
- Those who deal with cash, such as a server in a restaurant
- Those who keep their own books
The IRS targets these individuals because they demonstrate a greater margin of uncertainty when filing taxes. If you fall into one of these categories, make sure you double check your math and have documentation to support everything.
2. Take Only Deductions You Know You Deserve:
It’s hard to say no to deductions when you’re filing taxes. However, always research the specific requirements for claiming a deduction before assuming it applies to you.
With tax rules fluctuating, it’s hard to keep track of all the changes. However, the more deductions you take, the more likely the IRS is to raise an eyebrow.
3. Include Extras:
Feeling worried about your return? Do you think you’ll get flagged?
Then provide documents and extra forms. Leave absolutely nothing to guesswork.
To help you along, keep receipts, paperwork, paystubs and more to support everything in your returns. If you have a career that doesn’t provide pay stubs, consider making your own with a check stub maker so you can keep everything organized.
4. E-File Near the Deadline:
E-filing may reduce the chances of getting audited. This is because of simple logic.
E-filing reduces errors, so you’re less likely to get flagged for simple mistakes you might make when filling in a form by hand.
On top of e-filing, consider submitting your returns closer to the deadline. Some experts believe the IRS chooses who to audit by a specific date, making later forms less likely to get chosen.
5. Seek the Aid of a Professional:
Professionals not only save you money or get you more money on your returns but they also know the ins and outs of the business. They are precise, accurate and careful in filing taxes.
Furthermore, if you find yourself in a situation where your return may raise suspicions, such as inheriting money, a professional financial adviser knows exactly what forms to fill out to definitively prove you’re being honest.
Keep It Honest, Keep It Safe:
Getting audited is no fun at all but as long as you’re honest and accurate, you shouldn’t run into difficulties.
Of course, there are some tricks like these that might help.
One trick that isn’t on our list is reducing your debt. Specifically, that requires knowing exactly how much you might owe. Read all about avoiding further debt here.
You have the know-how. So sit back, get those taxes done and rest easy knowing you’ve reduced your chances of the dreaded audit.