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1. Neatness counts – this means doing your return on the computer and then transmitting to the IRS via their secure E-file. It’s faster and gives less errors. Use turbo tax or any tax preparer can do this for you
2. Accuracy counts – make sure your math is right because IRS computers do check your addition and subtraction to make sure your numbers add up
3. Schedule C blues – when your main income comes from W-2 jobs and you have a side business which loses money every year watch out! The IRS audits these like a hound dog on raw steak.
4. Deduction documentation counts – staple or attach scanned digital copies of receipts for unusually high charity giving, losses or other weird stuff.
5. Specific Numbers – What’s more believable to you that you made $43,567 or that you made $43,000? Enough said.
6. File late – there’s some empirical evidence that filing an extension reduces your audit chances. Maybe the workers are tired out after April 15.
7. Live Small – not in terms of “living below your means”. Much like insurance companies charge higher insurance depending on what zip code and color of car you drive there are certain cities and states that get audited more. If you have multiple homes use the one in lower audit areas.
To see the motley fool story go here.
Leave any comments with other tips you’ve had. Or you can write about horror stories or triumphs you’ve had dealing with IRS auditors.
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