The IRS audits more than 50,000 corporate and 1,250,000 individual taxpayers annually, primarily through correspondence reviews. While no one can guarantee that you will never be audited, there are some clear strategies you can use to reduce your chances of being selected for auditing.
Tip 1: Check your accountability:- Double check your calculations for all numbers in your tax return. The IRS Orange County tax attorney verifies income and deductions for returns for accuracy, and if your return has some miscalculation, your return may be flagged for review.
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Tip 2: Don't overestimate your deductions:- Make sure you have a receipt to prove any deductions on return. Your deduction will be assessed against the IRS computer versus other taxpayers in your income bracket. This is done to see taxpayers claiming relatively large deductions, e.g. $25,000 in charitable contributions from a taxpayer with an adjusted gross income of $75,000.
Tip 3: Don't confuse business with pleasure:- Self-employed taxpayers are usually reviewed by the IRS. If you are self-employed, keep a notebook for your car business use (state the date, place, destination of your trip and distance traveled) and keep all receipts for meals and entertainment.
Final Notes:- Keep in mind that if you are shortlisted for the exam, you will be required to provide the IRS with proof of any business withholding made, such as travel, meals and entertainment, to prove that it is a necessary expense for your Business. The more organized you are, the better your chances are that the IRS agent assigned to your company will conclude that you don't owe additional taxes.