Simple Tips for Avoiding a Tax Audit

One of the most dreaded tax-related happenings is an audit. No one wants to go through the hassle and stress of being audited by the IRS. The good news, though, is that there are many things that you can do to greatly reduce your chances of an audit. And, while none of these strategies are completely foolproof, they can greatly reduce the possibility that you will face an audit.  

Consider Incorporating

While, in some cases, who gets audited is just “random” or “luck of the draw,” there definitely are some groups of people who are more likely to be audited than others. This includes the self-employed, especially if you choose to file a Schedule C. While there isn’t anything inherently wrong with a schedule C, you can greatly reduce the possibility of an audit by choosing to either incorporate or form a limited liability company. If you’re unsure how to do this, any tax professional can assist you; it is a surprisingly simple process that can end up saving you a lot of hassle.

Check and Double-Check Your Returns

One of the easiest ways to find yourself getting audited is if you make errors on your tax returns.

Even if you correct them later, having any errors at all makes the IRS wonder where else you may have made mistakes, thereby increasing your chances of an audit. Your best bet is to either check and double-check your returns, including and especially all of your math, or, better yet, to have a professional prepare your returns or at least go over them for you.

Be Honest

Finally, as simple as it may seem, make sure you’re being 100% honest on your returns.

The IRS is very good at sniffing out those people who aren’t telling the full truth. Besides the possibility of an audit, there is no real reason to risk being dishonest and the consequences that can come if you’re found out. There are far too many legitimate, legal ways to save money without resorting to dishonesty. You can learn about real ways to save by getting help from a tax professional.