Connect with us


Have You Ever Been Audited? Three Strategies to Prevent a Recurrence



Have You Ever Been Audited Three Strategies to Prevent a Recurrence

The Inflation Reduction Act, which was recently signed, increased IRS funding by $80 billion. A significant portion of that money is also supposed to be set aside for tax compliance, or ensuring that people are actually paying the IRS what they owe. However, some of that money is also supposed to be used to enhance customer service and the filer experience.

Many people are concerned that their personal audit risk will increase because the IRS has made public its intentions to increase audit activity in light of that funding. You can find solace in the fact that the IRS is primarily targeting wealthy people and companies since they are more likely to be involved in tax evasion than the typical employee who makes $45,000 a year. Even so, the thought of being audited could be unsettling, particularly if you’ve dealt with one before.

The good news is that you may be able to avoid an audit this year with a few easy steps on your end. These are some actions that could prevent additional investigation of your return.

  1. Calculate your tax benefits accurately

Itemizing deductions makes more sense for many people than claiming the standard deduction. However, use precise figures if you plan to claim deductions on an individual basis. Attempting to estimate deductions or rounding up or down may expose you to an audit risk.

Suppose you wish to deduct the $1,012 cost of a laptop that you spent last year for work-related reasons. You may recall accruing a credit card debt of approximately $1,000. However, don’t merely write off $1,000 from your taxes. That could raise an eyebrow because the IRS might think that the nice, round number is inaccurate, even though you’re actually claiming less than what you spent, not more.

  1. Make a complete income report

You may believe that the IRS won’t be aware that you received $1,200 from a specific client in freelance income last year. However, you might be inviting trouble for an audit if that client sends you a 1099 form proving that income and you choose not to disclose it.

An additional copy of each 1099 form that is sent to you is received by the IRS. You won’t benefit from hiding that information, therefore.

By the way, income from dividend payments in a taxable brokerage account or interest earned in a bank account must also be reported. It’s possible that some of the 1099 forms that summarize these kinds of income won’t get mailed. To get the forms you require, you might have to sign into your different accounts.

  1. Consult a tax expert

No assurance working with a tax professional will prevent an audit of your return. However, it might be useful.

Before the IRS notices anything, a tax expert may see warning signs and work with you to amend your return. A professional might also remind you that you need to report some income that you might have overlooked.

If you hire a professional, you’ll typically have their assistance in answering any IRS inquiries, even if you wind up being audited afterward. Working with an expert could therefore be a smart choice even if you intend to file your taxes honestly and completely.

Tax audits are generally not very complicated. Frequently, all you have to do is reply to an IRS letter you receive in the mail with supporting documentation or additional details. Even so, auditing can be a stressful process. Additionally, before an audit is concluded, there might be some back and forth with the IRS. Thus, be truthful, and accurate, and seek assistance if you would rather not undergo an audit in 2024.

follow us on google news banner black


Recent Posts


error: Content is protected !!