With tax filing
season in full swing, many Americans are receiving their W-2 forms from employers and gathering income statements, investment summaries and paperwork related to credits and deductions. It's important that consumers review these documents carefully and gain a firm understanding of their tax situation this year, as the government is keeping a closer eye on taxpayers' returns. Tax audits are never a pleasant process, and a large number of them are the result of tiny mistakes and errors. However, consumers who want to avoid the additional scrutiny should follow a few steps to better protect themselves from an audit.
Taxpayers should ensure all of their income is reported on their tax forms. The Internal Revenue Service cross-references employees' W-2 forms with the information listed on their tax returns, and any discrepancies may automatically generate an audit, the Wall Street Journal reports. This advice is particularly important for freelancers and independent contractors who do not have federal taxes taken out of their paychecks. Providing all income figures and complete information go hand in hand when it comes to avoiding an audit. Make sure all relevant boxes are filled in and questions are answered in their entirety.
Consumers should also triple-check their math before submitting their returns. Filers listing their income, investment data, itemized deductions and the like are dealing with a heavy volume of numbers and it's easy to make tiny mistakes. However, transposed numbers or incorrect arithmetic can raise red flags and prompt the IRS to delve further. Individuals who are not math savvy or have a significant amount of income to report should consider seeking out tax preparation services for an additional layer of protection.
Individuals claiming deductions should ensure they understand the tax rules associated with these benefits and any special rules or requirements that apply. For example, self-employed individuals can claim a home-office deduction, but the rules for claiming this benefit are very specific and rigid. Consumers who understand the rules and regulations of the deductions they claim are likely to provide more sufficient documentation and avoid an audit, the Journal reports. Taxpayers claiming deductions related to charitable contributions should also take special care to provide receipts, invoices and other relevant documentation to support the write-off.
Consumers who have doubts when filing their taxes should do their research and consult a tax professional to educate themselves on their tax forms and avoid making costly mistakes.
Liberty Tax Service
provides computerized income tax preparation
and electronic filing. Each tax office
offers customers audit assistance, a money back guarantee, and free tax return checking.