Tips to Avoid Tax Audit

Trying to avoid tax audit?

There is no way anyone can guarantee that you won't get a tax audit but you can try to minimize the chances.

One method to avoid tax audit is to make sure that nothing on your tax return raises a red flag which can trigger an IRS tax audit.

Here you can see which things will create an audit red flag by the IRS:

  • Filing a loss for a business for many years. The IRS might decide that the business is a hobby and and audit your return. If the IRS rules that your business is a hobby you cannot take a loss against the other income on your tax return.

  • Claiming too large deductions by itemized deductions like contributions. You might be very generous with your charitable contributions but if the IRS feels that you gave more than they feel is reasonable for your income then you have a big chance of an audit.

  • Not reporting ALL of your income.

    You can't be forgetful at tax time. Make sure to remember about all of your income and report it on your tax return. If you won't then Uncle Sam will remind you about it by sending you a tax bill.

There is a lot of controversy about the home office deduction if it triggers an IRS audit or not. Many people will not claim this deduction (and many others) for this reason.

Not taking deductions you deserve is an expensive way to minimize your chances for a tax audit.

A better way of coping about this is to claim all deductions you are eligible for and keep good records. A great way to keep your records organized is by using Shoeboxed will scan in your receipts and bills, so it will be ready whenever you need it; especially when the IRS wants to see it.

Not filing a tax return is NOT a good way to avoid tax audits. Some people think that the less they tell the IRS the better and won't file a tax return at all.

If you have no income to report then not filing is fine. But if you have any income no matter how small check out the IRS rules for filing tax return if you have to file or not.

If you don't file a tax return for a year that you do need to file, the IRS can go after you FOREVER; there is no deadline for auditing you for the years that you did not file.

Go from Avoid Tax Audit to IRS Tax Audit

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