IRS tax audit
The IRS or Internal Revenue Service is the United States Federal Government agency that collects taxes and enforces the internal revenue laws. The primary duty of the agency is to ensure that people pay their taxes punctually and honestly. The odds are low that IRS tax returns are actually audited. Virtually, it is impossible for IRS to examine each and every tax return due to time and personnel constraints. Greater the income, there are more chances to have for being audited. Low income tax return doesn\'t make financial sense for IRS to audit.
Audit
There is nobody is immune from IRS audit. Here are some steps to follow to minimize the chances of being audited.
Use a computer to prepare the tax return. It should not only look cleaner to read but also minimize the chances of making a mistake on the tax returns.
Always check the figures. Once done with the tax returns, always make sure all the amounts that are entered in the tax returns document are correct. If the amounts are not correct it is always easier to fix the problem than to hope that IRS won t find it out.
Sign the returns- even though it is a no-barrier, many people simply forget to sign it. One of the most oblivious reasons is that spending couple of days for finishing and reviewing the tax return in the end forget signing own tax returns.
Use electronic filing when the taxes returns are filed on the hard copy, remember there will be an IRS employee who will enter the numbers that had been provided in their computer system. It is time consuming efforts. Also, IRS employee can make a mistake when entering the data into the computer system. So, it is better to file electronically so that there is no margin for introducing errors.
Use care for business expenses- one of the biggest advantages of the business is that to claim deductions. However, not every expense can be counted as business expense. The laws can be complicated and it is always better to see a tax attorney for such matter.
Provide proofs if having large deductions- expensive medical treatment, one can provide receipts, cheques, and medical bills. Large deductions can turn on the IRS audit flag and it is always good on the part to show as much as proofs one can. One may use disclosure Form 8275 for this purpose.
Timing for Audit
IRS is powerful, but not without limit. After filing tax returns, the IRS has only three years to begin and end an audit of the return. If the filing of return is before the due date, April 15, the three years start running from April 15. And if filed on extension, August 15 or October, the three start running from that date.
The best step can be followed by being honest about financial aspects. Nearly 50 percent of all taxpayers are audited during their lifetime.
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