Avoiding A Tax Audit

Avoiding A Tax Audit
by Takara Alexis

Taxpayers' have a big fear of being audited by the IRS (Internal Revenue Service). Even if you're confident that you have filed your taxes accurately, in the back of your mind, you wonder if you are going to hear from an IRS representative. You don't have to worry as much this tax season. Here are some helpful ways you can avoid a tax audit.

There are types of taxpayers that are more likely to be audited than others. These also involve taxpayers who earn more than $200,000, small business owners and self-employed taxpayers, and taxpayers who could be hiding taxable income overseas.

Make sure you check your math. Common reasons for tax audits are simply addition and subtraction errors. They are also simple to fix and avoid. Check and re-check your numbers to make sure you have included the right ones.

Use tax preparation software such as TurboTax or H&R Block. These software's can remove math errors that might lead to an audit. They can also do an analysis of your tax return to let you know any items that could trigger an audit. Be aware that even tax software can't completely eliminate any chances at being audited because the IRS computers audit a number random taxpayers yearly.

The IRS software does a inspection to make sure the income reports on the 1099s it received for your social security number coincides with what you reported. Differences might trigger an audit. If you are sure the amount on your 1099 is wrong, get in touch with the issuer and have it changed. If that doesn't work, try contacting the IRS by calling 1-800-829-1040 for help.

If you can, file at the last minute. The IRS receives a lot of returns on April 15th and they can not scrutinize them in the same fashion as those that are filed on February 1st. That's does not mean you can avoid an audit all together by filing later. You just reduce the risk.

Report each source of income. This includes alimony, child support, and cash receipts. Any child support and alimony that you receive will be tied to your social security number, so the IRS will already know about it. Though you might think getting paid under the table will keep you from paying taxes, the IRS can find out about cash receipts.

No matter what you think or feel about paying taxes, you are required by law to do so, so you might as well just pay them. Avoiding paying taxes is a crime and if you're caught, you'll face criminal charges and monetary penalties. Either way, you will still have to repay the taxes you didn't pay.