The IRS audited less than 1% of individual tax returns in 2018. However, that doesn’t mean you shouldn’t take steps to avoid an audit. The best way to avoid an audit is to file a complete and accurate tax return. Here are a few other tips to help reduce your chances of being audited:
- Report all of your income. The IRS receives copies of 1099s and W-2s, so they know how much income you should be reporting. If you don’t report all of your income, you’re more likely to be audited.
- Don’t take excessive deductions. If you take too many deductions, it will raise a red flag with the IRS. They may decide to audit you to see if you’re legitimate.
- Don’t round up or down on your tax return. When you do this, it creates a mathematical error on your return. The IRS may flag your return for an audit if they spot this error.
- Be careful with your charitable donations. If you donate a large sum of money or property to charity, the IRS may question the legitimacy of your donation. Make sure you have documentation to support your donation.
- Don’t try to hide income with creative accounting. The IRS has seen it all when it comes to creative accounting. If they think you’re trying to hide income, they’re more likely to audit you.
- Keep good records. If you’re ever audited, you’ll need to be able to prove the information on your tax return. Good records will help you do this.
- File your tax return on time. If you don’t file your tax return on time, you’re more likely to be audited. The IRS may also charge you penalties and interest.
- Don’t make mistakes. If you make mistakes on your tax return, it will increase your chances of being audited. The IRS may also charge you penalties and interest.
- Don’t try to cheat on your taxes. If the IRS catches you cheating, you’ll be subject to an audit, penalties, and interest. You may also be subject to criminal charges.
Follow these tips and you’ll be less likely to be audited by the IRS. However, even if you do everything right, there’s still a chance you could be audited. If you are audited, don’t panic. Just be prepared to explain the information on your tax return.