Let’s face it, no one wants to be audited by the IRS. Even if everything turns out fine, the process itself can be grueling, overwhelming, and embarrassing. After all, is there anyone whom you would invite to actually comb through your financial records just looking for a mistake? Here are the five rules of avoiding an IRS audit.

1. Do the Math. The IRS typically doesn’t pay much attention to a mathematical error here and there. In fact, simple mathematical mistakes are even corrected by the IRS computers. But if the IRS notices that there are too many of those mistakes to be random chance, you may find yourself audited. This is obviously the most common-sense way to avoid being audited, but it never hurts to be reminded that you should double-check everything you send to the IRS.

2. Don’t Call Attention to Yourself. The IRS audits several main groups. The first is the self-employed. If you are self-employed, you must be able to substantiate your expenditures as expenses that can be deducted.

The second group is those who are paid for their services or products in cash. Waiters, casino employees, and even doctors are prime targets for audits. To put it simply, the more you make, the more likely it is that the IRS is going to comb your tax return in order to find more money to take for government.

In addition, the IRS has been noted to recently target the following for an audit: Non-filers who have large incomes, those who invest in abusive promotions, high-risk/high-income tax payers, and those who use offshore credit cards. If you fall into any one of these categories, you should seriously consider enlisting the aid of a tax attorney to help you fill out your return in such a way that you will not call attention to yourself.

3. Substantiate Everything. During the actual audit, the IRS typically focuses on areas where taxpayers in general fail to maintain appropriate substantiation. These areas include travel, meals, auto, and entertainment. If you want to deduct auto expenses, you have to establish the percentage of time that you use it for business, as well as the actual expenses that you incurred. For meals and entertainment, you have to provide a receipt for expenditures totaling more than $75. A diary notation will suffice if the expenditure is less than $75. Whether you’re providing a receipt or a diary notation, you should be able to show the amount you paid, the name and the location of the establishment, the person you fed or entertained, the aforementioned person’s relationship with your business, and what you discussed. You’re also a lot better off if your receipts are organized rather than all thrown in a paper bag.

4. File Early. This simply lowers the chances that you will be selected for an audit.

5. Use Pre-Audit Strategies. Attach copies of bills for which you are claiming deductions, and attach receipts for large charitable gifts for which are you are claiming deductions. Steps such as these show the IRS that you know the rules and are willing to follow them. Your return may still be tagged for an audit, but if an IRS auditor sees how cooperative you are, he or she may choose not to conduct a full audit.

If you fall into one of the professional or high-risk categories listed in item two, go ahead and hire a tax attorney to help you get your claim ready. This can save you a lot of time and worry, simply because you know you have a professional taking preemptive steps to avoid an audit. It also means that you have someone intimately familiar with your situation to advocate on your behalf.

Author Bio: Seomul evans is a SEO consultant for Dallas tax Attorney and Dallas IRS Attorney

Category: Legal
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