File Tax Help

How To Avoid An Audit By The IRS- Part One

The IRS, armed with more funding and smarter computers, is planning to amp up its audits of individual taxpayers this year. Although if you have high income you are less likely to simply fall below the radar, having a lot of money alone is definitely not the only factor that can trigger an audit. Actually, last year only about 6.4 percent of the country's 440,000 highest-income tax payers were audited.

What this means is that there are precautionary measures you can take, or things you can avoid to reduce your chances of getting audited. In a lot of cases, the less attention you draw to yourself, the less likely you are to get audited.

A lot of things you can do are no-brainers. For example, be certain that all of the Forms 1099 that you have received for interest, dividend, and other investment receipts are reflected somewhere on your tax return. Usually this will be done on Schedule B. Internal Revenue Service computers are more efficient now and have gotten better at matching the copy of the 1099 that got sent to them with your return, and noticing if you left anything out on your return. If it notices any type of omission, the result may be a CP-2000 letter from the IRS giving you thirty days to explain the mismatch, or even the start of an Internal Revenue Service audit.

If you are planning on claiming large deductions for gifts to charity, make sure you meet the "paperwork requirements." These include having a receipt or some other type of proof on paper for every donation no matter how small, and for each donation of $250 or more, you will need to have written acknowledgment from every charity.

Try to remember that in the case of these bigger donations a canceled check will not qualify as sufficient proof. You have to have an actual letter from the charity before you file the return. The IRS is requesting this paperwork in "correspondence audits" and then turning down deductions that otherwise might have been valid because of untimely or missing paperwork.

Mallory Megan works for Rapid Recovery Solution and writes articles about commercial collection agencies. Also published at How To Avoid An Audit By The IRS- Part One.

Related posts:

1. How To Avoid An Audit By The IRS Part 2
2. So You’re Getting An Audit From The IRS Part One
3. What To Do To Get Car Donation Tax Deduction
4. IRS Audit Tips And Advice
5. Claim Charitable Donations For Tax Purposes
6. Tax Attorney Use For Audit Assistance
7. Tax Write-Offs For Your Business
8. Hiring A Tax Accountant
9. Say “I Do” And Then Make Tax Changes
10. New Method To Minimize Capital Gains Taxes