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Minimize the Chances of an IRS Tax Audit

Minimize the Chances of an IRS Tax Audit

Whenever tax season arrives, people start to wonder how often the Internal Revenue Service audits tax returns. No one in Cape Coral, FL, wants to do their taxes incorrectly and face fraud accusations.

So, how often does the IRS audit people? While filers have no surefire way to avoid an audit, you can do things to minimize your chance of facing one. This post explains what you need to know about avoiding an IRS audit and why a bookkeeping specialist can help.

Are IRS Audits Random?

No, IRS audits are not random. Tax audits usually occur when inconsistencies exist between the forms and information they have on file. For example, discrepancies between your bank account information and what you put on file may trigger an audit.

Recipients of assistance programs or credits, like the Child Tax Credit or Earned Income Tax Credit, tend to face audits more often. The government wants to reduce fraud as much as possible. As such, they check recipient tax reforms to ensure the credit or assistance they received was something they needed.

So, how often do the IRS audit filers? Luckily, not often. In 2018, only 140 of four million S corporations, less than 0.0001%, received an audit. In 2017, of roughly 154 million individual income tax returns, only one million saw an IRS agent for further questions.

Still, new policies can increase the number of audits completed each year. To prepare yourself, continue reading to learn several ways to try to avoid an audit.

#1. Double Check Your Tax Forms

People make mistakes often, but making a mistake on your tax return can come off as trying to lie. Look back at the documents and ensure you have the exact numbers put in that should be there. If you don’t understand what a form asks for, speak with an experienced tax professional for assistance.

#2. Keep Backup Documents

Those with evidence to back up their claims often experience fewer chances for an audit. Keep receipts and organized documents of your tax information. Despite how infrequently an IRS audit occurs, you want to prepare for the off chance they choose you.

#3. Keep Your Deductions Realistic

One reason so many individual income tax audits occur stems from people reporting hefty losses. For example, they say they have a home office but barely use it and report the area as a deduction. Then, when the IRS visits, they do not have the information to back up their assertion.

If you face a net loss in your business or at work, report that properly. However, you must have the information to back up your statements. Reports sometimes return years after you file if you trend on a loss for three years or more.

Contact a Professional Bookkeeper

How often does the IRS audit taxpayers? As IRS audits occur more often, you may want to organize your tax files. The experts at G&R Bookkeeping Services LLC help the citizens of Cape Coral, FL protect themselves just in case. Our attention to detail and premium services help you prepare for each tax season.

Call (239) 424-9296 to prepare today!