How To Avoid an IRS Tax Audit

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When you're preparing your taxes, keep in mind that certain claims may raise a red flag.

To complete this How-To you will need:

Reasonable claims
Proof of deductions and losses

Step 1: Don't exaggerate your generosity

When it comes to your charitable deductions, don't wildly exaggerate your generosity. Anything above $1,600 per year, per family is eyed skeptically by Uncle Sam. If you're audited, you'll have to document any deduction over $250.

Step 2: Use precise figures

Use precise figures. The IRS is immediately suspicious of any deductions rounded to the nearest hundred or thousand. It indicates you're guesstimating a figure that you probably can't prove.

Step 3: Don't insult their intelligence

Don't insult their intelligence: If you simultaneously claim a tiny self-employment income and a large number of dependents, the IRS is going to wonder how you're supporting so many on so little.

Step 4: Don't add the numbers up too neatly

You'll also arouse suspicion if you're running a side business whose losses conveniently wipe out your salaried income taxes, or your business reported a large income but supposedly netted very little profit.

Tip: If your small business is a substantial money loser two years in a row, expect IRS scrutiny.

Step 5: Be careful if you're in a red flag job

File cautiously if you're in a cash business that makes it easy to hide income, or if you are a professional who owns their own business and does your own bookkeeping. These tax returns are more likely to be audited because the potential for cheating is greater.

Step 6: Be wary of the earned income tax credit

If you're self-employed and manage to earn the exact amount of money that entitles you to the maximum earned income tax credit, the IRS may want to verify your good fortune.

Step 7: Tread carefully if you're wealthy

The more money you make, the more care you should take, because your chance of being audited rises with your income. It's not just the little people who pay taxes!

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• claims
• deductions
• losses
• proof

[weofparadigm]

Right, rich people pay just as much tax as the rest of us (wink wink nudge nudge)

[pilarrogne]

Thank you for sharing.. I am looking for this.

[artsydee47]

Obama takes major tax credits to avoid paying $500,000 in taxes but those making $250,000 a year really want to pay more. His words in his so called budget speech, Can you say hypocrisy?

[artsydee47]

This is a videa you won't see on any media outlet!

Check out Do as I say, not as I do. Obama tax filing same 2009, 1010, 2011 and Obama claims that the rich want to pay more! Obama is self employed? Foreign tax credit?

[zakneifien]

@Rookie35m Actually the top 10% income earners pay ~60%, the Top 10% is those who make $150k (single) or $250k (married) and up.

[LostHisMarbles]

@serenitybond

That's very true but rich people tend to have more resources in doing so and can do so to a much greater extent than poor middle class people. A poor/mid class person would probably waste more time, energy and money than then would be worth it to effectively and safely save a reasonable amount of money from taxes.

[serenitybond]

@LostHisMarbles ?? if rich people hide their money then poor/mid class people may hide THEIR money as well.

[LostHisMarbles]

It's a well known secret that there are rich people who hide their money in various ways so they don't have to pay taxes on all of it. They certainly pay more money in taxes than a poorer person but they get out of a greater % of the taxes that they should be paying.

[Rookie35m]

yeah really

[weofparadigm]

Not really

[Rookie35m]

Rich people pay 80% of the country's taxes.