Mathematically speaking, it is unlikely that you will be audited by the IRS. Only 1% of all tax returns are audited annually. Moreover, budget cuts in 2014 suggest that the frequency of IRS audits will decrease. Regardless, being audited by the IRS can be an unpleasant, tedious process. Below are a few tips to help avoid it.
Check your Math!
Your 7th grade math teacher’s admonition to double check your work may have been the most valuable tax tip you’ve ever received. Many tax returns are audited merely because the agent made a simple math mistake. If you are filling out your own tax return, briefly scan all the columns to assure that everything adds up.
High States Players Take Extra Precaution
The more money you make, the more likely it is that you will be audited. Individuals with incomes above $200,000 experience an audit rate of 3%. Make sure you consult a qualified CPA like Kathleen M. Egan to take care of your taxes, in order to be protected from the wrath of the Internal Revenue Service.
Hopefully, any philanthropic donation is motivated by good, honest intentions. The IRS, however, does not care about your intentions. What they do care about is overestimation. People have a tendency to misrepresent the amount they donate to charity, and the IRS is aware of this.
Another area in the genus of charity that attracts the attention of the IRS is donation items. It is now required to have a professional appraise any donation worth more than $5,000 dollars. People have a tendency to overstate the worth of an item donated to charity, and the IRS are hip to this.