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Tips that may help you avoid a tax audit

On Behalf of | Mar 3, 2022 | Tax Law

Tax season is here, and some filers scramble to get the help they need to get the numbers just right for a possible refund. But, sometimes, they are surprised to learn that the IRS has decided to audit their tax return.

“What did I do wrong?” and “Why am I being audited?” are among the many questions that immediately come to mind when receiving an audit notice. Common reasons for an audit include tax filers’ oversights, mistakes, omissions, and exaggerations; however, some audits are conducted at random, and, as such, are unavoidable.

Check and recheck the figures

Consistency and normalcy are key characteristics to rely upon when filing tax returns. Here are some ways that you may decrease your chances of an audit:

  • Check and recheck the math: This cannot be stressed enough. Whether you are filling out a paper tax return, relying on software, or working with an accountant, this rule is applicable in every situation. You do have some advantages when using software or an accountant, but, even in these instances, you must provide the right data.
  • Stick to the norm; no room for fabrications: The IRS can spot unusual claims and patterns. For example, it is not a good idea to claim that your charitable donations were more than your income. Make sure what you are informing the IRS is truthful and that you have the records to support your claims. Keep receipts and records. Some tax filers provide numbers that are too perfect without the support of records.
  • Have all the necessary tax forms: Missing forms such as 1099-MISC (for money earned for side jobs) or 1099-INT (for interest) and 1099-DIV (for dividends) may lead to an audit. Make sure to go through your mail, check online financial accounts to find those outlying forms. The best practice is to keep a file cabinet or file box and keep these forms organized by year. Keeping your tax documents organized will not only make life easier at tax time, but they are also important to have available during major life events such as buying or refinancing your home.
  • Remain cautious regarding tax deductions and credits: A deduction or credit from the previous tax year may no longer be available to you due to a boost in income. Double-check these, and, if you have questions, contact a tax professional.
  • Fix any mistakes: If you find that you need to file an amended tax form, do so as soon as possible after the issue is identified. This is added work for you but may help you avoid getting attention from the IRS. As noted, the IRS looks for patterns, and if it sees discrepancies from previous years, its auditors may come knocking.
  • Work with an accountant who knows the most up-to-date tax laws: You want someone in your corner who is competent with the current rules. Perhaps your chosen tax professional is nearing retirement and continues to rely on knowledge learned 30 years ago.

Do not sweat

Each year, millions of tax filers go through this same rush and worry routine. But as long as you are honest and rely on solid professional help, you can avoid most reasons for an audit, and be prepared for a quick resolution if you are audited at random.

While these tips can help keep you out of tax trouble, there are many issues that can arise from filing errors, omissions, and overdue tax bills. The attorneys at Gudeman & Associates have over 50 years of experience in tax planning and resolution. Call us today to schedule a free 30-minute consultation. During your appointment, we will outline a plan based on your specific situation to ensure your financial future and peace of mind.