There are few things Arizonans dread more than the news that they will be getting audited by the IRS. Even the most scrupulous of taxpayers can spend many sleepless nights wondering if they have categorized and documented their deductions and credits properly.
In this series of blogs, we will look at the ten basic steps you can take to minimize the chances of getting that scary audit letter in the mail.
#1: Don’t Claim Questionable Deductions
You have the right to arrange your financial affairs in a manner that gives you the lowest taxes possible. Deductions and credits are there for a reason, and that reason is to save you money on your taxes when you qualify.
This can get you into trouble, however, if you start “stretching the truth” a little bit in order to justify a deduction. If you find yourself doing something that doesn’t feel quite right, ask yourself how you would defend the tax deduction or credit to an IRS tax auditor sitting across the desk from you – and if they would be likely to believe you.
Keeping to the straight and narrow when preparing your taxes is the best way to avoid an audit – and the best way to get through one unscathed.
#2: Don’t “Do-it-yourself”
There are some who claim that getting your tax return prepared by a professional makes it less likely for you to be audited. Whether or not that’s true, getting help on your return from an experienced, honest professional tax preparer will help ensure that you are following tax law appropriately.
If you choose to do your own return, using a software program can cut down on human errors – just make sure you don’t manually override the program if you think it made a “mistake.” At least investigate the issue a little further before doing anything drastic
#3: Don’t make it TOO Easy for the IRS
The IRS offers taxpayers a convenient electronic method for filing taxes. Two out of three taxpayers were already filing their taxes electronically in 2008 – but it might not be a good idea for you. While you have a duty to file your taxes truthfully and accurately, you are not required to make it super easy for the IRS to access all the information on your return.
Despite all the benefits of electronic filing – ease, speed, reduced paper waste, and etc. – if you are worried about getting audited you may be better off sticking to paper filing until you are required to do otherwise.
#4: Check and Double Check
If you are not using a software program to “do” your taxes, you need to be extra careful to check your math work as you go through your tax return, and then check it again when you are finished. It wouldn’t hurt to check the numbers even if you hire a professional to compile your tax return.
Math mistakes are some of the most common errors on returns, and are certain to generate a correction notice from the IRS – which, while not the same as a tax audit, may result in you having to send in more money.
#5: Keep Track of All Your 1099 Forms
For some, 1099 forms fall like rain around tax time. 1099 forms are used to report everything from interest income to gambling winnings. You don’t have to send these forms in to the IRS, because the entity sending you the 1099 will take care of that. But you do have to account for all of them on your return – and be ready to produce them if you are audited.
The IRS will match your reported 1099 earnings against the 1099s they receive – so be sure to carefully account for each and every one. If one of them is wrong for some reason, you can provide an explanation and adjustment on the return, but you need to report it first.
As always, if you’re confused about the rules, check with a qualified tax professional.
#6: Don’t Over-share
You have an obligation to report your income and complete your taxes accurately and honestly. You have an opportunity to attach any explanatory or supporting documents to your return as well. But take care. The IRS usually only asks for an explanation or disclosure, requiring only that you be able to provide supporting documentation should you be audited.
Resist the urge to send in too much documentation, it only complicates your return and makes the postage more expensive. Of course, do keep the supporting documentation in a well organized tax file for the required time period so that you can easily produce it if necessary.
How Tax Attorneys Can Help
At The Pew Law Center, PLLC we understand that if you do run into tax problems with the IRS, it can be overwhelming. Whether you owe back taxes, haven’t filed taxes for several years, or have received an audit or wage garnishment notice from the IRS, the tax attorneys at The Pew Law Center, PLLC can help you or your business with these and any other federal and state tax problems.
We are a dedicated debt relief law firm. We help people from Phoenix, Mesa, Gilbert, Queen Creek, Chandler, Scottsdale, Apache Junction, Tempe and throughout Arizona work through tough tax problems or file for bankruptcy every day. We can help stop the debt cycle and give you relief from your overwhelming, burdensome, and crushing tax problems. Please don’t wait another moment. Call us right away – our attorneys will help get you the fresh start you deserve.