9 Reminders to Help Avoid IRS Audits

Many people are scared of the IRS even if they did nothing wrong. If you want to avoid IRS audits, remember that taxes should always be on the back of your mind, not just during April. Furthermore, here are nine precautions you can take to avoid those dreadful meetings with Uncle Sam.

1. Tax returns with mistakes and miscalculations are much more likely to trigger an audit than returns with complete and accurate information. Double checking your tax return before sending it to the IRS!
2. Never complete a 1040X to amend your original tax return unless absolutely necessary. Why? Because 1040X forms are viewed with much more scrutiny than original tax returns. If the original tax return and the 1040X differ substantially, your return will be referred to the audit department for further review.
3. Avoid newer "green" deductions such as the energy tax credit unless you have documentation to substantiate these deductions. Newer deductions are often selected for audits at a higher rate than older deductions so if you're claiming a newer credit or deduction, be prepared to show proof when you receive a letter in the mail from the IRS.
4. Try not to add a new dependent to your return unless you experience a justifiable life event, i.e. adoption of a child, birth of a child, care of an elderly or disabled parent. If you are adding a child as your dependent, remember that he or she must have lived with you at least six months plus one day during the tax year for which you're filing.
5. Think $1,500. Many IRS deductions have a threshold of $1,500 before a return can be selected for an IRS audit. Therefore, any deduction above $1,500 should be documented with receipts and invoices.
6. Remember, the only person who has your best interest at heart is YOU. Your tax preparer is often bombarded during tax season and prone to making mistakes, any one of which could trigger audits. You should always sit with your preparer and review your return together before signing it.
7. Be on the lookout for scams. In the 2008 filing season, many people fell for a scam and filed a form 8888 to request an additional $8,000 stimulus payment which they believed the IRS was refunding. The only problem was that there was no IRS form 8888 or any additional $8,000 stimulus payment. Many of the taxpayers requesting the fake payment were selected for audit.
8. NEVER mail more than one tax return for each filing season. If you are unsure whether the IRS received your return, allow 4-6 weeks, then call to verify receipt of the return. Receipt of duplicate returns can trigger your return being flagged for an audit.
9. If you've ever been audited before, it's much more likely that you'll be audited again. So be extra careful to keep receipts for all deductions if you've ever been audited.

Lastly, if you were selected for an IRS audit, don’t fret because Uncle Sam is actually reasonable and pleasant. Remember to read the letters from him carefully and submit anything he ask for. If you filed a legitimate tax return, there’s nothing to worry about.

This post is written by Yvette Carnell, who wrote this article for TaxMattersSolutions.com, which helps people with IRS problems.

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