Four Proactive Steps to Avoid an IRS Audit

IRS AuditIf you are concerned about getting audited by the Internal Revenue Services (IRS), you are not alone. In fact, these concerns are so common that the financial experts with Forbes recently published a piece with a handful of tips to avoid become the victim of an IRS audit.

 

How can I protect myself from an audit? The exact steps that will help reduce the risk of an audit can vary depending on the situation. However, four of the more applicable proactive steps from the piece in Forbes include:

  • Double check your numbers. This is a three part tip. First, make sure that the numbers reported on tax forms match the records. Second, make sure your math is accurate. Finally, make sure all Social Security numbers are transcribed correctly.

  • Make sure your numbers are comparable to those with similar demographics. The IRS also will consider whether or not your record reporting matches with those in similar demographics. An audit becomes more likely in the event the reported numbers seem too far off compared to others that are of a similar station in life.

  • Stay out of the red. Your odds of an audit increase if your business or deductions result in reporting a loss year after year.

  • Honesty remains the best policy. This old adage holds true for a reason. However, even when you are honest it is important to back your filing up with evidence. One way to do this is to keep records like receipts to support deductions claimed on returns.

 

Although these steps will help to reduce the risk of an audit by the IRS, it is important to note that there is “some amount of dumb luck involved in being selected for an audit.”

 

As a result, if you are selected for an audit, do not panic. Because each situation is different, seek the assistance of a tax controversy attorney, like those at Robert J. Fedor, Esq., L.L.C., when a notice of an audit arrives or you are struggling with IRS collections.  

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