Avoiding An Audit: How To Do It The Right Way
An IRS audit makes nearly everyone squirm. Nobody wants to talk to an IRS agent, especially not an agent that is looking for reasons to claim that you are stealing money from, and money owed to, the government. However, instead of avoiding the IRS agent by not showing up to the scheduled meeting, here is how to avoid an audit the right way and never have to face an agent.
Hire an Accountant to Manage Your Taxes
Always hire an accountant to manage your taxes. If the audit comes about as an error of the accountant, the accountant has to answer for it, not you. That means that the accountant has to show how he/she arrived at the totals and where he/she might have gone wrong. Usually, accountants do not make mistakes, so if an audit does occur, the accountant can show the IRS agent where the IRS went wrong. Then it becomes kind of fun to see the tables turn on the IRS. Additionally, the accountant acts as a witness for your defense because you did not do your taxes yourself and the accountant can prove and provide everything necessary to show that.
Leave NOTHING Out
Withhold nothing important from your taxes. The government looks to see that all of your ducks are in a row, financially speaking. If something does not add up, that is usually when your forms are flagged for an audit. If you make sure that your accountant has all of the required and important documents needed, you cannot be audited because there is nothing that would cause the IRS to flag your tax documents.
Understand What Creates High Risk for Audits
Most people fail to understand what creates high risk for audits. When you know what creates high risk, you can avoid all of those issues too. For example, low income reported along with a report that you have a hired a domestic to work in your home is a risk. How can you hire a housekeeper or nanny if you do not have enough income? Higher than normal medical bills when you report that you have health insurance may be another risk. Basically, anything that is contradictory on your forms is a high-risk issue. Look at your forms as you file to see if there is any contradictory information. Your accountant can also help you file explanatory documents to prevent flagging for audits, which definitely helps.
Talk to a professional at an audit firm if you have more questions.