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Help, I'm Being Audited!
Tips for Surviving an IRS Audit By Deborah Ng
Are you at risk for an audit? In many cases audits are random events; in other cases there are certain factors contributing toward being chosen for an audit. Here are some tips for avoiding an audit:
- Be honest. Do your best not to attract unwanted attention. Over-inflating numbers is almost the same as calling up the IRS and saying, "Audit me!" The self-employed are especially at risk. Report all income, even if it's cash or tips.
- Double and triple check your math. Many are chosen for audits because of errors on tax forms.
- Report all interest and winnings. If you won a million dollars playing slots in Las Vegas (hey, it could happen) make sure it's duly noted.
- Be fair with your deductions.
- Charitable contributions are fine, but be reasonable. Don't inflate the numbers. If you donate over $500, be sure to fill out the necessary forms.
- Your earnings should be more than your expenses. If you declared an annual salary of $40,000 it's not in your best interests to purchase a $50,000 car.
- Don't transfer large sums of money unless it's absolutely necessary. The IRS pays attention to such things and may want to know why such a transfer took place.
- Sign your return! It seems like such a silly mistake, doesn't it? Yet this is the sort of thing to catch an auditor's eye.
The self-employed and those earning over $100,000 annually are especially at risk for an audit. If you don't wish to call attention to your tax return, don't do anything to raise a red flag. When it comes to the IRS, honesty is truly the best policy.