The tax audit is the biggest fear of every taxpayer in these United States. However, the good news is the IRS audits less than 1% of tax returns every year. In 2015, the number fell to the lowest in a decade. Nevertheless, the possibility is still there. We are going to show you how you can go about avoiding a tax audit.
Don’t Make Mistakes
A surefire way of receiving a visit from the IRS is to make mistakes on the amount you have deducted, reported, and claimed. Most of the time, this is a matter of human error. However, the IRS doesn’t know this and they have to assume the worst.
Double-check your return and make sure you can account for absolutely everything with paper evidence.
Claiming Big and Contributing Big
The very wealthy and the very poor are most at risk of receiving audits. This is because low-income families have access to big tax breaks and the wealthy are more likely to donate or hide their money to get out of paying tax.
These brackets are fertile grounds for fraud, so be extra careful if you are claiming a wide range of tax credits.
The IRS has repeatedly said that filing returns electronically reduces the risk of errors. Since they believe this, it translates to a lower chance of receiving an audit. E filing will dramatically decrease the audit risk simply because it is much harder to let genuine mistakes slip by when filing in this way.
As always, speak to a tax expert to ensure you are filing correctly.
Image credit: Alan Cleaver