Posted by Fletcher Accounting and Tax Service Inc.

8 Things To Know; Avoid Tax Return Audit

8 Things To Know; Avoid Tax Return Audit

There are so Many things scares people: snakes, public speakers, pins, a visits to the dentist and the thought of getting a tax return audit by the Internal Revenue Service (IRS). As far as tax audits are concerned, there are good news and better news: the chances of audit are meager, and you can further reduce your chances of been audited.

Now, let take a look at your chances of been audited and seven ways to avoid that tax audit.

Understand the selection process

Although the process may seem somewhat random to mark any audit, the IRS uses Discriminate Income Function (DIF), a computer program that compares the deductions to those of other income groups. Do not let this frighten you, so as not to take all the deductions you are entitled to; Make sure you have the documentation that supports them.

However, keep in mind that some taxpayers are selected via Lucky Lottery so that you cannot completely protect yourself from control, but you can reduce your chances by following the other suggestions below.

Be good at Math

The IRS continually cites incorrect math as one of the biggest mistakes in tax returns. Making mathematical mistakes on your tax slip will make them notice, not in a positive sense. Although the IRS usually corrects your error and sends you your bill, many mathematical errors may indicate a level of carelessness that causes your return to be flagged. So be careful when you prepare your return. Copy the numbers into the forms or enter the software carefully and check the numbers when you are done. Check for transposition errors, as well as additions and subtraction.  Do not have a wrong judgment of security when using a software package. Your tax training software cannot tell you when you made a mistake before entering the details.

Be as normal as possible

This may be true in business, but not concerning tax returns. When it comes to reports that are ready for an audit, IRS looks for exceptional values or non-compliant data standards. For example, it is rare for you to claim to have given more in charity donation than in your taxable income (although this may happen, ask Buffett), or the size of the home office changes from year to year.  Consider the value of filing a claim that could expose you to tax return audit: is it worth it? If so, then do not be intimidated. Make sure your tax story is real and that you have documents to prove it.

Do not stop filing

You may think that if you did not earn a living during the tax year or have you owe no tax, you do not have to file a return. Nevertheless, this is wrong because if you do not file the tax return for any reason, the IRS may contact you and ask questions. If you have no income or do not owe taxes, you must also file a statement explaining that you have no income and tax.

Do not use an annoying tax publisher

Do not assume that most tax publishers will do an excellent job for you. If your expert makes mistakes, you will get audited. Of course, professional copywriters can make mistakes, and some experts may conflict with the law when they try to cut taxes, while others may steal. However, don't let this deter you from reaching out to a qualified tax expert, because good guys will know more about the tax code than you and can save much more than they charge. Remember that you are ultimately responsible for tax returns.

Find a licensed professional, perhaps a "registered agent," an IRS-certified tax advisor, who is authorized to represent you before the IRS if necessary. Tax preparation software is also a good option for many people, especially if your financial life is not very complicated.

Explain clearly, avoid inaccurate expense categories, such as the essential category used by some business owners called "Miscellanea." If your company requires an unusual deduction of any kind (anything an IRS auditor has not found thousands of times before), provide an explanation or documentation.

Check your social security numbers (SSN)

Transposing numbers can be as easy as writing faster than you think. Moreover, trying to remember your child's social security numbers can lead to mistakes. Make sure you enter the correct numbers and check again. Claiming an employee with the wrong social protection number can be a sign of audit.

Execute the estimated tax payments and submit the 1099 and W2 forms on time. Delayed and estimated quarterly payments, unpaid amounts and undervalued amounts attract IRS. Respect the deadlines and keep them. The 1099 and W-2 files use simple online tax services,  which are economical and easy to use.

Do not report an empty slip

If you do not have an income and you submit a tax slip indicating that, you are doing the right thing, but the chances of receiving an audit check will be even higher than that those reporting income.  For example, if you are self-employed and you have a net loss for this year, the IRS may want to double-check to make sure you are not planning on having a quick one on them. In 2016, approximately 3.25% of returns were audited due to no adjusted gross income.

Timely filing

This is like a piece of cake. Late delays increase the flags. It is easy to ask for an extension. There is therefore little reason not to respect the initial term. Remember that all the money you owe is always due in the initial timeframe. The extra time is to do the documents.

Final Thoughts

Be smart, however, do not make mistakes. Do not let fear of been audited to discourage you from reporting a significant loss or significant material deductions to which you may be entitled. Make sure you keep good records to justify these items. The seven tips above will help you improve your chances of not being audited, but you cannot reduce your chances to zero. However, honestly, you may have some features of tax education in schools that raise questions on the increase in chances of an audit, on how to get high income or deductions. Also, some returns can be checked at random.

Despite your efforts, if you are still facing an audit do not start hyperventilation. Audits are usually relatively minor events. About 70% or more of audits are done by mail, without the need to stay in an office or in front of an IRS officer. Moreover, many of them translate into more money. Audits can seem scary, but it's usually not a problem if you're honest.

Fletcher Accounting and Tax Service Inc.
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