There is no foolproof way to avoid being audited. The IRS makes most of its selections either based on the fact that the filer is part of a targeted group or because a computer program picked out the tax return.
However, even though many of the returns are chosen by random means, there are certain red flags that make a return more likely to be audited.
If you don’t want the IRS knocking on your door, avoid these red flags:
Arithmetic errors: If you make an addition or subtraction error, you’re going to hear about it. This usually doesn’t result in a full-blown audit, but check your math before filing your return.
Keep excellent records, especially about your deposits.
You talk too much. If you’re ever foolish enough to try to pull a fast one on the IRS, keep your mouth closed. You’d be surprised how many neighbors, friends, and even family members report what they’ve heard.
This can even include things like charitable donations. If you claim you’re giving 50% of your income to charity, it looks odd to the IRS. They’re going to take a closer look at everything on your return. That doesn’t mean you can’t give 50% of your income away – it simply means that everything else will be scrutinized.
Your tax preparer is questionable. Not all tax preparers are created equal. Some simply aren’t very good. Others are intentionally breaking the law. They may promise a large refund and then claim false deductions on your return. While you’re not entirely at fault, the IRS will be coming after you, too.
Being audited is never a positive experience. On the other hand, if you act in good faith, it’s unlikely that anything bad will happen beyond an increase in your tax bill.
The tax code is complicated – everyone knows that, even the IRS. Be honest and you have little to fear. However, keep these red flags in mind before filing your tax return!
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Bryandie Cox-Walker, founder of Business Building Profit Lab, a virtual business school, is a millennial entrepreneur and successful business owner with over fifteen years of experience in financial services. She holds two master’s degrees in business, a bachelor’s in Sales and Marketing, and several certificates. She has a passion for learning and helping people get their businesses up and running from the ground. Bryandie has had success in building three separate successful businesses within the past decade. Her extensive knowledge and training are in Income Tax preparation, Credit repair, Life insurance, and business consulting, giving her an exclusive insight into the world of credit and finance.