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How to Prevent an IRS Audit
By Darrin Mish of Law Offices of Darrin T. Mish, P.A.
How to Prevent an IRS Audit Most people are usually rather scared of a tax audit. Those who have been into an audit have circulated horror stories, which many of them are true, no matter how extreme and horrible they may appear to be. Both individual tax payers and businesses or companies can be audited at any point by the Internal Revenue Service. Fortunately, the IRS audits only about 1.5% of all the tax returns in the United States as certain precautions can be taken to reduce the chances of being one. First, make sure you declare all of your income. The government requires that taxpayers report all of their income in detail, no matter what source you received it from. Whether you are an independent contractor, or an employee earning a salary, the rules as published by the IRS clearly specify what is required to be reported on a tax return. Any cash or tips you have made must also be reported and included on your tax return in order to avoid an IRS problem. Making certain that you have all the proper documentation is another good tip in avoiding an IRS audit. The W-2 or the 1099, which is prepared by your employer and which reports the amount you have earned in the previous year while employed in that particular company, is among the examples of these documents. Just make sure that the numbers in the W-2 match the entries on your tax return. Another simple yet equally important tip is ensuring that there are no mathematical errors in your tax return. The IRS will without a doubt, spot this kind of errors as they are very easy to check. You have to double check that the correct entries are placed the correct lines of the tax forms. To the IRS, being sloppy in doing the math implies being sloppy in all other aspects of the tax return. A usual mistake among self-employed business owners and contractors is their declaration of a home office. The IRS requires that your home office is distinctly used only for business in order for it to qualify for the associated deductions. Simply declaring that you have a home office is questionable and will bring your tax return to the attention of the IRS. Since this is the case, you may want to make sure that you have a solid case against any issues they may have so that you do not end up having a big IRS problem. For example, if you often work in your dining room, that does not imply that it can be considered a home office. You must not keep personal possessions in your home office and personal activities such as parties or other social gatherings must not occur there. Also, make sure that you do not claim more than twenty-percent of your home as a home office. There are several known methods and tips that you can use to avoid being audited by the IRS. Though it may seem like the government is against you and you cannot adequately battle an audit, just remain composed and do not forget that there are certain steps you can take to protect yourself. After all, you absolutely do not want to turn a small IRS problem into a big one. Darrin T. Mish is a Nationally recognized Attorney whose practice focuses on representing clients across the United States with IRS Problems. He is AV rated by Martindale-Hubbel and is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. He has been honored by a listing in Martindale-Hubbel's Bar Register of Preeminent Lawyers. His passion is providing IRS help to taxpayers with both individual and payroll tax problems. He also spends a great deal of time traveling the nation providing training to attorneys, CPAs and Enrolled Agents on how to handle their toughest cases with the IRS. If you would like more information about his services please visit http://getirshelp.com. |
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