The IRS audited nearly 9.8 million taxpayers in 2018 alone, despite the reports of a rapidly shrinking staff. You may think that the IRS is only interested in the big fish (aka corporations) but the reality is, you just never know.
The best way to make sure you don’t become subject to an audit is to be proactive and make your tax returns as transparent and detailed as possible. Here are a few things to keep in mind that you will help you keep the IRS away.
Report all the Income
It is important to report every penny you receive as income, no matter how small and insignificant it may seem. Even a trivial amount of income may be reported to the agency by the company or person that paid you. And if the IRS cross references a payment to you that you failed to report, the chances of an audit will go up.
Work with a Professional Tax-Preparer
Using an enrolled agent or CPA or any other type of expert tax-preparer will ensure that you are up to date on tax laws and requirements for your returns.
Report Specific Numbers (don’t round off the figures)
Make sure the numbers on your tax return are as precise as possible and not approximations or round numbers. For example, it’s much better to claim an exact amount of $3,991 than rounding it off as $4,000 in, say, medical bills. The IRS might become have questions if your expenses or deductions are mostly round figures.
You can round to the nearest dollar (the IRS does that – so do individual tax software systems such as H&R Block) but not to the nearest hundred dollars, for instance.
File Your Returns on Time
Filing your tax returns late can increase the chances of an audit, especially if you are a high-income taxpayer. Make sure your 2019 tax returns are filed by April 15th, 2020.
Keep Detailed Documentation
Not sure if the IRS will understand your claimed expenses, deductions, or exemptions? It is recommended to keep ample documentation to support your claims. If you think the IRS may find an item on your return questionable, take measures in advance and provide an explanation with your return.
Double Check all the Numbers
Be cautious that your figures match those on forms sent in by your employers, mortgage comapnes and investment brokers as the IRS always looks out for discrepancies.
Tax returns filing deadline is approaching fast (April 15th, 2020). If you need help preparing your returns, call us at 610-933-3507 or contact us online. Our licensed tax preparers and consultants will make sure your returns are filed in an appropriate and timely manner.
