There is no way to be 100% sure that you are not going to be audited. However, there are ways that you can lower your chance of being audited. Today, we are going to share some audit protection tips that will help ease your mind about the IRS auditing you.
Use your computer to prepare your tax return
The IRS finds computer prepared returns to look more official and they actually favor those who process their returns via computer. If you go to a professional tax preparer, you will find that they use computers.
There are programs that allow you to prepare your own taxes, while still receiving the professional look, such as, Intuit’s TurboTax. Not to mention that if you use Turbo Tax you can prepare your return online. In the event that you do not have access to a computer, you want to make sure that you print out the information carefully.
A messy return is a great way for you to be audited because the IRS views you as being careless and disorganized.
Do not round deduction numbers
You should use exact numbers for deductions and never round them. When you round your deductions, you are letting the IRS know that you are estimating things and you do not have records to back up your deductions.
Large deductions should include documentary proof
If you claim large deductions for things such as natural disasters, it is important to make sure that the back of your tax return contains the documentary proof to back up these deductions. You should have copies of your receipts, cancelled checks, pictures, insurance reports, and any other documentation you have.
This will not stop the IRS from auditing you but the documents will be brought to the attention of the IRS classifier who screens computer-picked returns for audit potential. In the event that your documents look legit, you will not be audited.
Avoid filing schedule c with a net loss from a small business venture
If you are filing a Schedule C, Profit or Loss for Business, that shows a net loss from your small business venture you are at risk of being audited. The IRS auditors love going after these types of returns.
Report your side income as other income
Side income should be reported on line 22 of your tax return. This should only be done, however, if the income is small, and you do not plan to claim any business deductions. Technically, this income should go on Schedule C but when you file a Schedule C, your chances of being audited are increased.
Reside in a low audit area
The chances of you being audited depend on where you live. For example, residents of Nevada are audited four times more than people in Wisconsin. Your tax pro or IRS office can provide you with more information on this.
Coverage in case of an audit when using TurboTax
When you file your return with TurboTax, you’ll receive free one-on-one audit guidance from a TurboTax expert. They’ll explain what to expect and how to prepare for an audit, as well as answer any questions you may have. Plus, their TurboTax Audit Defense provides full audit representation for an additional fee.