Fund Your BusinessFinanceHow to Avoid a Tax Audit

How to Avoid a Tax Audit

While the IRS would like you to believe that a tax audit is simply a chance to review your situation and make sure that you are paying your fair share of taxes, this knowledge doesn’t make this process any less stressful for you. Most people don’t need to worry about undergoing a tax audit. However, if you are one of the few individuals who do think about this possibility, just use the following tips to keep yourself out of tax trouble.

Tax Preparation

One of the easiest ways to avoid a tax audit is to maintain accurate records throughout the year. Doing so gives you ready access to the information needed to complete your tax forms. Instead of waiting until the end of the year or the time when you decide to file your taxes to gather your information, you should keep pertinent receipts and documents in a file, shoebox, or desk drawer. Doing so should help you to avoid forgetting to list specific information on your income tax form.

tax audit

Red Flags for Audits

Certain circumstances are more likely to trigger an audit than others. Here is a list of the ones that you should be able to avoid easily enough simply by paying attention to what you are doing:
• Incomplete tax forms
• Unsigned tax forms
• Incorrect social security number for yourself or a dependent
• Information that does not match your W-2
• Large amounts for deductions in comparison to your income
• Large losses to business income
• Listing non-standard deductions
• Listing dependents other than children, parents, and grandparents

Although few people need to go through a tax audit each year, it does happen. Sometimes it is as simple as remembering to follow the guidelines for completing your tax forms or to include certain types of expenditures or income. If you want to avoid having to undergo an audit on your taxes, just complete your forms as accurately as possible.

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