Free Consultation: 858.450.1040 Payment | Client Login

MENUMENU
  • EDD
  • IRS
    • IRS Notices – What They Mean
  • About Us
    • MEET THE TEAM
    • PRACTICE AREAS
    • CONTACT US
  • TAX LAW & EDD RESOURCES
    • SMALL BUSINESS OWNERS TAX LAW GUIDE
    • EDD & IRS AUDITS
    • CRIMINAL TAX
    • SAN DIEGO TAX ATTORNEY
    • Orange County Tax Attorney Services
    • TAX BALANCE
    • INNOCENT SPOUSE RELIEF
    • OTHER TAX LAW MATTERS
    • SALES TAX AUDITS
    • UNFILED TAX RETURNS
    • OFFERS IN COMPROMISE
    • CALIFORNIA INCOME TAXES
    • INTERNATIONAL TAX
    • TAX COLLECTIONS
    • CORPORATE | BUSINESS TAX
    • PAYROLL TAX AUDITS
    • TAX LEIN
    • FAQs
  • SBA Loan Resources
    • PPP FORGIVENESS DENIAL APPEAL
    • SBA Criminal Defense
    • FAQs
  • RESOURCES
    • Blog
    • VIDEO LIBRARY
Home > Blog > 10 Ways to Avoid an IRS Tax Audit

10 Ways to Avoid an IRS Tax Audit

February 28, 2021

While there is no official guaranteed way to avoid having your taxes audited by IRS, there are a few tips that you can follow to lower your likelihood of being audited. In 2019, IRS audited 0.45% of submitted tax returns. For reference, that’s approximately one out of every 220 taxpayers. 

Even if your tax returns are completed seamlessly, there is still a possibility of being audited. In addition to auditing returns prepared incorrectly or whose forms don’t match the returns, IRS also audits a randomized selection of returns on an annual basis. 

Following these tips is likely to provide your best chance of avoiding an audit, besides the chance of being randomly audited. 

Double-check your math 

While it may seem silly, one of the first things that IRS checks when reviewing your tax submissions is whether or not your math is correct. While it may seem like a small, silly mistake to make, making a mathematical mistake has the potential to hold catastrophic results for your tax returns. 

Aim for normalcy

While there are various opportunities in life to strive to be different, out of the box, and unique, filing your taxes isn’t one of them. If there were ever a time to wish to assimilate into a crowd, it’s tax season. 

Check your Social Security Numbers (SSN)

When preparing your taxes and typing seemingly endless numbers and figures, it can be easy to make a mistake and not notice a wrong number or two. This especially is the case with your Social Security Number. Many tax filing programs and systems ensure security and privacy by hiding your confidential information following its submission.

This is largely the case when submitting your SSN in particular. Double-checking to ensure that your SSN was typed correctly may seem like a silly issue to have, but is more common a problem than one might initially expect. 

Phone home 

If you’re a young adult or college student, you should make sure to call home before officially filing your taxes. It’s a common mistake that young students may end up being contacted by IRS due to duplicate filings. This happens when the parents claim their child as a dependent unbeknownst to them and the student files their taxes as an independent as well.

Luckily, this is an easy problem to fix. A simple conversation with your guardian, or anyone who could claim you as a dependent, can provide clarity to ensure that you file correctly. 

Be thoughtful when assessing your credits and deductions 

The number of available credits and deductions can be overwhelming. You want to ensure that you claim relevant deductions, but also want to ensure you’re not claiming anything you’re not 100% certain you’re eligible for. If you think you may be eligible for a certain claim or deduction, be sure to read the descriptions on the appropriate form very carefully to confirm that you are in fact eligible to claim it.

In the event that you incorrectly claim a deduction that you turn out to be ineligible for, you may end up having IRS reaching out to fix it. Partnering with a tax professional is always the best way to ensure that your claims and deductions are accurate. 

Make money 

While it is possible to report reasonable losses within your tax return, your reports should be in alignment with the total needed to support yourself. If you can’t appear to support yourself, IRS may decide to perform an audit to gather more details. In the event that someone else supports you, they may decide to audit them as well to gain clarity on the situation that is persisting. 

But not too much money

The same way that claiming your income as lower than makes sense, the same goes for claiming more than is reasonable for your personal return. Making too little can draw unwanted attention, but making too much can do the same. Seems like you just can’t win when it comes to IRS.

Referencing back to #2 on our list, tax season is the time when you most want to seem invisible. Any deterrence from the normal thresholds poses as flashing lights to IRS and is likely to end up in an audit. 

Ensure preparedness before getting started

IRS looks for easy wins to go after and audit. While the big-name businesses might be bigger fish for IRS to catch, they often focus on the smaller fish that they know they can catch. This might include looking out for taxpayers that make slight mistakes or discrepancies between the details of their W-2 or other various tax forms.

As such, it’s important to wait until you have all relevant tax forms ready for submission prior to beginning your filing process. Patience is key in making sure that your documentation is complete before moving forward with filing your taxes. 

Be precise

While estimations and rounding might work when measuring spices in the kitchen, it doesn’t work for IRS. If your expenses total $852.78, declare exactly that. Rounding down to $850 or up to $900 isn’t going to cut it.

IRS workers are people too. They shop at the same stores as the average person and know about as well as you and I do that normal transactions and purchases don’t often end in perfectly rounded zeroes. 

Correct mistakes

Filing an amended return isn’t necessarily a bad thing. While it might not be ideal to have to resubmit an adjusted return, it’s significantly better than submitting an incorrect return, even if only slightly off. Submitting an amended return may be the difference between IRS deciding to perform an audit after identifying the issue themselves. If you recognize an issue in your tax submission, you’re best off doing what you can to make the necessary changes before IRS does. 

If you think you may be at risk of experiencing an IRS audit, reach out to the Milikowsky Tax Law team today!

10 Ways to Avoid an IRS Tax Audit

Filed Under: Blog, COVID-19, IRS, News Tagged With: Audit, Business Owners, California Taxes, Corporate Tax Compliance, EDD, Filing taxes, International Law, International Tax, IRS, IRS Audit, Small business, Tax Attorney, Tax Preparation, Tax Season, taxes

Archives

Search

Categories

Questions About
Tax Audit/Controversies?

A representative will be in contact within 1 business day
PRIVACY POLICY

Get Monthly Updates on Important Tax Law Matters



Milikowsky Tax Law is located at: 4250 Executive Square, Ste. 650, La Jolla, CA 92037
o. (858) 450-1040 | m. (858) 212-0542 |
Privacy Policy

DISCLAIMER:
The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

Milikowsky Tax Law © All Rights Reserved. Clear1099.com | Cal1099.com | California1099.com © All Rights Reserved.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie settingsACCEPT
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT