Against the Odds of Tax Audit

IRS Tax ProblemsIRS News

Truthfully speaking, a taxpayer can’t avoid his tax returns to be selected for an IRS audit. But one can minimize the chances of his returns being selected.

An IRS audit is the process of reviewing or examining an individual or organization’s accounts and financial information to ensure that the tax returns being filed are accurate and correct.This way, the IRS can determine if the information listed on the returns corresponds to the exact income amount of the taxpayer.

The IRS randomly chooses the tax returns to be audited. If a taxpayer’s return is being audited,it doesn’t mean that he is accused of tax fraud or any tax crimes. If one is honest in filing his tax returns, then there is nothing to worry about. However, every taxpayer doesn’t want to have his returns being audited. As what is mentioned above, it can’t really be avoided. But there are five steps on how to minimize the possibility of a tax return be chosen. The five steps are the following:

  •   Calculation Error

Double check all the computations on your returns.

A mismatch on your calculations can cause the IRS database system to generate errors causing your returns to be chosen for IRS auditing.

  • Interest, dividend, and W-2 reporting errors

The taxpayer must appropriately enter all necessary statements such as interest and dividends in the tax forms to avoid any errors or notices.

  • Over-abundance of Itemized Deductions

Use the standard deduction rather than the itemized deduction to ensure accuracy in the calculations. If one chose to use an itemized deduction, it must be appropriate to his income fee and must have necessary documents to support it.

  • Incomplete Return

The tax forms must be completely filled up. Each tax forms have specific target so the taxpayer must fill-in his returns on the exact specific forms.

  • IRS knowledge about your inappropriate tax items

Having a clean record on the IRS is also important. If the taxpayer is worthy enough to be trusted, he already minimizes his chances of his returns to be audited.

Among the five steps in preventing a tax return from an IRS audit, it is still better to be honest in filling up information in the tax forms. One would not be afraid of having his return being audited if he knows very well that he is innocent of any crime.