5 Major Steps to Avoid your Chances of Being Audited

1. Make sure there are no mathematical errors in your tax return. Check your W2s and 1099s with the income you have placeed onto the 1040.

If there is an error in the tax return, the IRS (computer) will write you a letter explaining the changes. The chances of an IRS human getting involved is high. So check the math.

2. Report ALL income. If you receive a 1099, or not, report the income. Taxpayers who did not report the income, and the client later turned in a 1099 because of their own tax problems, is a story heard too often by the IRS.

Plus, it gets your file sent to the under reporting unit - and that could be the beginning of a very bad experience, depending on the circumstances and amount of the under reported income.

3. Don’t cheat, especially if you are self-employed. The IRS is aware of how taxpayers cheat and often times place the information onto the IRS web site.

There is a entire section on the IRS web site, about how offshore account holders cheat and how the IRS catches them.

4. Don’t get hobby losses confused with business losses. You only have 3 out of 5 years to claim a lost on a business. Your business actions, receipts and expenses usually will expose a taxpayer as operating a hobby, or, a for profit small business.

5. Do not take the word of an unknown tax professional when it comes to tax loopholes. Once you sign the return, regardless of who told you what, you are 100% responsible for what is on your tax return. Don’t believe me? Ask Wesley Snipes!

Note: Past due returns that reduce a taxpayers tax liability by large amounts, I am sure, are fair game for audits. That is one of the reasons, you may want to employ an experienced tax professional to complete your past due returns.

It is not hard to reduce the tax amount owed when re-doing a “Substitute Return” that the IRS prepared because a taxpayer failed to file. The IRS does NOT make any effort to deduct additional deductions that you might be entitled to.