Tax Facts: Avoiding an Audit
In a perfect world, there would be no need for the dreaded tax audit. Because, in a perfect world, everyone would pay their taxes on time, accurately, and earnestly. Also in a perfect world: chocolate chip cookies are what grow on trees and keep the doctor away when eaten at least once a day.
Since (sometimes unfortunately) we live in this world rather than that perfect, cookie-filled one, tax audits are a thing we have to deal with. An audit from the IRS doesn’t necessarily mean you’ve done anything wrong – many are conducted at random – but they can be quite a hassle. So here are a few tips that can help you stay off the IRS’s radar and avoid that audit.
The best way to stay off the IRS’s list is to be as honest and accurate as possible when doing your taxes. This means reporting ALL income you’re required to report and being honest about the donations and deductions you’re reporting. It’s also important to be as accurate as you can, meaning no rounding numbers up or down (unless the instructions say otherwise) and completing every required box on every required form.
Another key to keeping your forms accurate is making sure all of the basic information you’re reporting (like you or your business’s name, TIN, and address) matches what the IRS has on file. You can verify your information with the IRS directly by calling 1-877-829-5500.
Double Check Your Dependents
If you have children, double check to make sure they actually qualify as your dependents in the eyes of the IRS. Children can be claimed as dependents until age 24 if they’re attending college and until age 19 if they don’t. Trying to list children who don’t qualify as dependents is a big red flag for the IRS audit office.
The Devil’s in the Details
Once you’ve been filing for a while, the IRS assumes your return is going to be more or less the same from year to year. That’s why it’s important to be as detailed as possible: a significantly larger than normal charitable contribution can be suspicious unless you’ve provided an explanation that your business doubled its earnings this year and therefore you had more to donate. This is what the “Notes” section on each form is for, so make sure you use it!
Know Your Deadline
Knowing when to file and pay your taxes is very important if you want to avoid an audit. If you do, the IRS will have to issue penalties and, once they’re looking at your info, they may decide it’s time for an audit. Remember: the best ways to avoid an audit always involve sending as few red flags as possible to stay off the IRS’s radar.
It never hurts to apply for an extension of time to file. Filing an extension won’t raise any red flags with the IRS and, if you do, they’ll leave you alone for a while so you can focus on making sure everything in your return is accurate and filed on time (by your new due date, that is).
As always, we’d like to advocate e-filing as the best, easiest way to file your IRS Forms accurately enough to avoid an audit! It’s not a 100% guarantee, but you are less likely to file a return with errors when you e-file. So if you have any questions about e-filing your return, don’t hesitate to reach out to us! And stay tuned with ExpressTaxFilings for more of the tax information you need!
