As scary as it sounds, an audit can be inconvenience as well. However, the good news is that only 1% of tax returns are selected for auditing. There are a number of ways you can avoid an IRS audit. Here is how to avoid an IRS audit:
Reporting All Your Income
Failing to report your income from a W-2 or 1099 is an invitation for an audit. It is possible to forget your income from a part-time job or side consulting during the year. So be very vigilant and double-check all your incomes and make sure they are accounted for.
The IRS receives copies of all W-2 or 1099 that you get. So they have a record of your income and if the numbers don’t match up then there is no way you can avoid an audit.
Claiming Tax Deductions
Make sure you thoroughly document any tax deductions or credits you have. Large deductions, although claimable, may still stand out. So make sure all documents are thoroughly prepared. For smaller claims and deductions, there is no need for a written acknowledgement. But it never hurts to be prepared in advance.
Claiming Business Use of Vehicle
If you are self-employed, claiming deduction for business use of your own vehicle is allowed. However, claiming to use it 100% of the time for business purposes is not right and may actually instigate an interest.
Unless and until, you have a separate car of your own for business purposes. Make sure you keep a thorough record of the mileage, if you plan to claim any deductions.
Avoid Filing an Amend Return
Although, you have the option to file an amend return, if you forget to claim a deduction, it is better avoided. So, when you are filing your tax returns, do so in a calm and peaceful manner. Check and recheck everything.
A recent data has shown that filing electronically has lower error rates as compared to filing via paper forms. The more errors you make the more attention you draw to yourself.
If you mess up your numbers or exaggerate your claim, you are definitely looking for trouble.
Tax Help MD professionals
Our experts at Tax Help MD are ready to connect with you whenever you need help with your tax or and tax-related issues.
Connect with us today!
Dial 888-632-4506 and get FREE Consultation Now!