How to reduce the chance of Tax Audit?
If the Internal Revenue Service (IRS) decides to audit your tax return it’s your bad luck. However there are numerous ways to reduce the risk of tax audit. Follow these few steps and avoid the chances to trap for the IRS audit as mention below:
- First and foremost thing is that the honesty. A tax return should be contained 100% truthful data as it would reduce the risk of audit. You should file return with the real figure of your income, credits, deductions and other amounts.
- Take the advantages of realistic itemized deductions as unusual or unrealistic deductions or credits might raise red flag to IRS for audit. There are so many deductions offer by IRS to taxpayers but confirm whether you are eligible to take advantage of the deduction or not. If you are not aware of the eligible deductions you must take the help of tax professional as they are well familiar with the various arenas of tax laws.
- Avoid the use of round numbers for deductions as it indicate that you are estimates your expenditure for deduction rather to keep good and accurate financial records.
- Another thing is very important that you should report all income while you are preparing the tax return. Don’t try to hide your income. It will lead you for the high interest or penalties. So always report all your income.
- E-filing is the best way to reduce the risk of tax audit. IRS uses computers to analyze the taxpayers’ returns as to potential audit. As per the IRS point of view the chances of getting error notice for the tax audit might be reduced when you e-file your return.
- You should disclose proper and enough information into your tax return. Avoid disclosing too much information. Always provide true and accurate information and give explanation or footnotes when you think it is necessary.
These all are the tips for reduce the chances of getting audited. Thanks and best of luck for your business.
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