“You have been Audited!” A phrase that strikes fear into the hearts of any tax-paying American who has been either doing their own taxes or was just unlucky enough to win some kind of nega-verse lottery that scrutinizes all your earnings from last year. For those unlucky enough to find themselves already in the I.R.S.'s death grip, this comes too late. In the event you haven't been audited yet, here are a few ways to stay “under the radar,” but nothing can fully immunize you from having your records usurped from under you.
First, watch your deductions! The I.R.S. will red flag any deduction that is proportionally high to the taxpayer's income. Claiming that you are entitled to the upper limit of deductions will surely trigger an audit review even if you put them within the accepted limit that may apply to you. Any income over $100,000 has an audit chance of almost 2%, while under that is a paltry .93%. Over $200,000 raises your odds to almost 3%, and anything over $1 million dollars carries almost a 10% chance for an audit. In short, even if you take all the precautions and are reasonable in your deductions, the higher your income the higher chance you have to be audited.
Having to deal with a lot of cash can make you have to deal with the I.R.S. more as well. Even waiting tables can put you under the watchful eye, and their first look is usually your bank deposits against what you claimed as your income. Keeping your income as honest as possible may not prevent you from being audited, but it will certainly help keeping you out of the line of fire. This also applies to self-employed people, as those taxpayers are usually more informed and more prone to writing off more expenses.
None of these are sure-fire ways to avoid being audited, as the I.R.S. are the ones who get to decide when the time comes for it. These things are very important however, to keeping yourself off the radar as much as possible come tax time. One of the safest ways to avoid an audit is to e-file as well. We have many informed agents who will help you to file your taxes accurately while still getting you the biggest refund possible. Check us out at Online Tax Pros and see how much you can save this tax season!
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Mr. Holbert is a representative of onlinetaxpros.com. These articles are for informational purposes and should only be reproduced in it's entirety and given proper acknowledgment. Let onlinetaxpros make your tax season quick, easy, and get the most out of your return. Visit my blog at www.onlinetaxprofessionals.blogspot.com
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