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Avoiding a tax audit

Tax time can be a stressful time. Worrying about who is going to prepare your taxes or when you are going to find time to gather all of the necessary documents can be bad enough; but if you fear you might be audited, it can become a nightmare.

The truth is that less than 1 percent of returns actually get audited. There are some tips you can follow to help make your chances even less.

  1. Don't procrastinate until the last minute. You know when the tax deadline is, so set yourself a deadline of at least a month prior to that. Rushing to do your taxes or even to gather the information makes mistakes much more likely. If an examiner has to review the details because of a mistake, he or she may start uncovering questions that would lead to an audit.
  2. Don't manually file by hand. Even if you don't want to use a tax professional, there are plenty of automated tax programs online you can use. According to the IRS, paper returns have a 21 percent error rate. Remember, errors cause the IRS to scrutinize.
  3. Don't leave out taxable income or guess at numbers. If your copy of a 1099 or W-2 has not been received by Jan. 31, contact the employer and request a copy. The IRS may have received it even if you did not. Your return must include any documents they have received for you.
  4. Don't exaggerate deductions when itemizing. Also, all deductions are not usually round numbers, so if you are rounding off all of your numbers to make it easier, it might raise suspicion. Keep your records just in case.

Following these sensible tips may help you avoid a tax audit. If you do happen to be one of the small percentage of individuals that is being audited, don't panic. It may just be simple questions you can easily answer. If it is complex, contact a tax attorney who can help provide you with a defense regarding your tax audit.

Source: CNN Money, "Tax audit risk: Are you unknowingly raising your chances?," Maurie Backman, accessed April 03, 2018

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