How to Avoid an IRS Tax Audit

Five Tips For Avoiding An IRS Tax Audit

IRS Tax AuditSome taxpayers inadvertently raise a red flag making them more likely to be the subject of an IRS tax audit. In particular, home businesses, small business owners and other self-employed taxpayers seem to be more likely to face an IRS tax audit. But the risk of being audited can be reduced with proper planning. Here’s 5 tips that may help:

1.      File your income tax returns on time even if you cannot pay the full amount: While interest and penalties may accrue, not filing your tax returns will get you in hot water and may even lead to criminal charges. If you have not been filing your tax returns promptly you should consult with a tax attorney before the problem gets worse.

2.      Professional Tax Preparation vs. Reliable Tax Preparation Software: We highly recommend that you have your taxes prepared by a competent tax professional. The additional cost is usually well worth it. However, if you choose to use tax preparation software, try to use good quality software such as TurboTax or H&R Block. This software will analyze your return for problems that could trigger an IRS tax audit before you file. Not only that, they will also offer recommendations that may avoid an IRS tax audit altogether.

Whether you choose a professional tax preparer or software you should be aware that some tax audits by the IRS are randomly selected. No mater how careful you are, the risk of an IRS tax audit cannot be eliminated completely. If you are audited and you’ve done things right you have little or nothing to fear. Either way, consult with your tax attorney before the audit.

3.      Be sure that you report all income including child support, alimony and cash: Be aware that court ordered child support and alimony payments are traceable by the social security numbers of payers and recipients so while you may think you’re getting away with reporting taxable income, you’ll eventually face an IRS tax audit and will get caught.

4.      Report all 1099 income: Here again it’s important to realize that the IRS can easily trace 1099 income from both the payer and the recipient’s Social Security and Tax ID numbers. One of the most certain ways to be called for an IRS tax audit is to foolishly try to hide 1099 income.

5.      Filing Your Tax Return With The Crowd: While the best way you avoid a tax audit is to properly prepare and timely file your tax returns, the fact is that the IRS gets kind of overwhelmed when the masses file their tax returns on April 15th. There seems to be a consensus that filing with the crowd will decrease your chances of facing an IRS tax audit. Perhaps this is true, but the best way to avoid an audit is to do things right from the start.

IRS Tax Audit? Get Help!

If you’re facing an IRS tax audit please contact a tax attorneys today.

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