Most taxpayers have mixed feelings about filing season, with some dreading the stress of gathering and organizing their records and paperwork but also looking forward to receiving a refund when it's all said and done. But for many individuals who are self-employed, bring in a considerable income or claim certain deductions, they also worry about the risk of triggering an audit from the tax man.
The majority of audits conducted in the U.S. are paper audits only and are typically resolved by mailing in supporting documents or clarifying certain details. But these can still be stressful for taxpayers. So to lower the risk of being audited altogether, there are a few moves taxpayers can make when filing their taxes.
First, always rely on a calculator. Simple math mistakes are one of the most common reasons adults' income returns are flagged by IRS systems, according to SmartMoney.com. Individuals may balk at using a calculator to conduct simple math equations, but even the smallest errors can have big consequences when they throw off the final figures on an income tax return. So use a calculator when calculating deductions and income and double check the work when finished.
Second, it's imperative for individuals to have sufficient supporting documentation when claiming deductions and credits. Adults claiming certain deductions, such as those for home office expenses or charitable contributions, should explain themselves fully when filling out their taxes, the financial website urges. In addition, it's important to keep receipts, invoices and other documentation that can back up these write-offs just in case the IRS needs further clarification. The IRS has a three-year window for conducting an audit, so adults should keep this documentation with their tax paperwork through this period.
Lastly, individuals can greatly lower their risk of an audit by working closely with a tax preparer
. This is especially true for young adults filing taxes for the first time, adults who have undergone significant life changes, such as divorce, marriage, foreclosure and similar events, or taxpayers with significant assets and holdings. Working with a professional can not only help adults avoid common mistakes, but preparers can answer questions and suggest other tax benefits that individuals may not have been previously aware of.
Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.
About Liberty Tax Service
Liberty Tax Service is the fastest -growing retail tax preparation company in the industry’s history. Founded in 1997 by CEO John T. Hewitt, a pioneer in the tax industry, Liberty Tax Service has prepared over 8,000,000 individual income tax returns. With 42 years of tax industry experience, Hewitt stands as the most experienced CEO in the tax preparation business, having also founded Jackson Hewitt Tax Service.
Liberty Tax Service is the only tax franchise on the Forbes “Top 20 Franchises to Start,”
and ranks #1 of the tax franchises on the Entrepreneur “Franchise 500.” Each office provides computerized income tax preparation, electronic filing, and online filing through eSmart Tax.