Many people believe they’re immune to an IRS audit because they don’t make an extravagant income. But that would be a mistake. The IRS doesn’t care how much money you earn. It only cares about getting the correct amount of money you owe. If you receive an audit notice, there’s no reason to panic. Countless people around the country get audited all the time. Usually it’s just a simple mistake or an honest deduction. But if you’re wrongly audited and facing harassment from the IRS, the tax professionals at the Greenberg Law Group P.A. are trained negotiators who can make sure your interests are properly represented.
Receiving a letter from the IRS can be a bit unnerving. But if you follow these ten tips, you can significantly reduce your risks of ever getting a knock on the door from men in dark suits.
- Report your proper income- It may seem like an obvious thing to do. But many people neglect to accurately report everything they’ve earned. It’s sometimes easy to forget about short temp jobs or freelance projects. Make sure you have all your W-2s ready and prepared to file.
- Keep track of your receipts-If you’re facing an audit, you may need to prove a receipt from a restaurant was used for business rather than social purposes. Also keep your receipts pertaining to transportation costs.
- Monitor your bank transfers- Auditors will check on all the deposits made in your account. By moving large amounts of money between different accounts, it can create the appearance of greater income.
- Limit your charitable donations- Giving away at least 10 percent of your reported income can generate red flags and bring more attention from the IRS.
- Incorporate your business- If you’re self-employed, make sure to fill out a corporate return rather than file a Schedule C. This will reduce your chances of being audited by 10 percent.
- Double check your information- It’s easy to make small mistakes in areas that require major information.
- Accurately report home office deductions- The IRS is cracking down harder on those who abuse the system and don’t properly report income made from the their home business. Educate yourself on the latest IRS guidelines on deductions made for home businesses.
- Don’t rush- Take your time while filling out your taxes. The faster you try to complete your taxes, the more likely you will make mistakes.
- Don’t be complacent- Many people with modest or lower incomes don’t believe the IRS will review their tax records. Every source of income is taxable.
- E-File- According to the IRS, filing your return by computer can reduce your risk for errors