Receiving a tax audit notice from the IRS can make you really uncomfortable for days. You will be asking yourself what went wrong, and why the taxing agency decided to audit you or your business. May be, you have unpaid taxes, you lied to the agency when filing your tax returns or any other suspicious thing can make the IRS offer an audit notice to you. However, you can avoid tax audit problems by learning the following secrets. Read on for all the details.
- Avoid errors when filing your taxes!
When filing your tax returns, you enter your personal details and other information about your income. You may also enter details of dependents, medical expenses and other details. You can make simple errors such as misspelling your name, entering wrong social security number(s), or even make errors when entering figures showing your expenses, deductions or even credits. Also, errors on calculations can trigger an audit. Therefore, avoid the errors by being more careful, filing your taxes online, or even hiring a tax expert to prepare and file taxes for you.
- Report all your income
The IRS or the state checks your income year after year. Also, they do comparisons, and when they notice a discrepancy with no supporting documents or information, you are likely to be audited. Therefore, include all your wages, bonuses, self-employment income and other incomes when filing your tax returns. This will ensure you are not faced by audit problems that can land you into more serious tax problems.
- Avoid overstating your deductions
When you exaggerate your deductions such as charitable deductions, home office deductions, or business expenses, you will be raising a red flag. The IRS will ask for tax audit, and you will not like the outcome, particularly, when the deductions are out of proportion compared to your income or last year’s tax returns. Therefore, when claiming deductions, just be realistic to avoid flagging your tax returns for audit.
What can you do in case of a tax audit problem?
You can do all the above, but end up getting a tax audit notice. What should you do? First, you need to assess your situation by checking the tax notice, what you have paid, check if your records are in order. Then, hire a tax attorney for audit defense. Remember if you lied to the tax agency, you can end up with a huge debt and that can lead to tax liens, wage garnishments, asset seizures and other enforcement collection actions. Therefore, have a competent tax attorney to help you throughout the audit, and to defend you in case of a problem.
There are so many things that can trigger a tax audit. Data entry errors, overstating deductions, wrong filing status, not filing all your income, among other things, can make the IRS issue an audit notice to you. An audit can clear your name or land you into more serious tax problems. Therefore, use the above tips, and you will avoid audit problems.