No one wants to get trapped in IRS trap of tax audit. You can easily avoid the tax audit without doing much of efforts. First thing that you need to follow while filing the tax is Honesty. If you’re filing your information and income details without any flaws and with honesty, you can refrain yourself from tax audit. In case, you’re not sure about some items such as your expenses or tax deductions or tax relief options, you can check the information on internet. There you’ll come across various forums and blogs with related and relevant information. Friends and relatives can also guide you in the right direction. However, the best way is to seek legal advice from a tax professional.
Keeping your tax calculations as close as to the accuracy is a must to avoid tax audit. If IRS systems find any error in your calculations, the software will correct it automatically. But in case the filed deductions are more than the tax code, you can be the lucky one. In order to compare your previous expenses and deductions IRS uses formula named DIF score. IRS considers DIF to check your deductions, income, your family’s size and your residence.
Most of the people ignore to keep the bills of travel, entertainment and meals however, whenever tax audit takes place IRS agents ask for the things that are quite tough to keep or maintain. If you’re spending more than $75 on anything try to keep the receipt or bill and if you are fail to represent any bill, no deductions will be provided by the IRS. Follow an organized system to keep your receipts so that you can provide them to the IRS in a planned manner. If you’re doing any charity even then receipts are mandatory to get deduction on taxable amount.
Using pre audit tax strategies is a good way to preempt a tax audit. In a given year if your income tax has faced a large deduction don’t forget to attach a copy of the deduction or bill with your file. The IRS system will definitely check your file however, when it get checked physically by a real person, your account will not get selected for an audit as you’ve attached a proof deduction with it. Hence, a one proof can greatly reduce the chances of falling into the category of tax auditing.
If you carry out transactions through your foreign bank accounts as well, declaration of your offshore accounts is necessary. It’s legal if you’ve got offshore funds, but you must pay federal income tax, if you do not want to be audited by the IRS. Not paying Federal tax is completely illegal and consequences might include a tax audit. While preparing for tax filing, tax preparation software becomes very handy. These software programs will correct the calculation errors automatically. Some of them are so advanced that they can inform you about the item that could lead to a tax audit.
Once you’re done with your preparations, re-checking is the key to stay from tax auditing.