Founded by a former IRS Agent

Founded by a former IRS Agent

Avoiding IRS Tax Audits

March 19, 2015

Avoiding IRS Tax Audits

Many people, including those who are high-income earners, are increasingly experiencing in-person IRS audits and receiving more IRS correspondence. There isn’t one method for filing a tax returns that is assured to prevent an IRS audit. Certain things can be done to avoid incurring the cost, stress and time that result from an audit.

Understand Deductions

A person’s tax return will get noticed by the IRS computer system if their ratio for deduction to income is high. It is important that companies and individuals only claim deductions that are valid and based on IRS guidelines. Every effort should be made to not claim a deduction more than once on a return. Any questions concerning a deduction should be directed to a tax professional.

Appropriate Exemptions

A person needs to make certain they are only taking appropriate personal exemptions. These exemptions need to be accurately calculated and claimed on the tax return. A tax professional will know the important details about dependents and exemptions.

Reconcile Tax Documents

It is important that all documents sent to the IRS with a person’s tax return reconcile. This also includes any documents that are provided to a person’s state, Social Security Administration and more. An employee needs to be certain their IRS form accurately reflects what is found on the W2 filed by their employer. A company needs to make certain that all of their quarterly tax filings reconcile accurately with their yearly tax return.

File Taxes On Time

Should a person or company file their annual tax return late, or file more than one tax return late, an IRS tax audit may be started. Any person who is a high-income earner and required to file a number of tax returns simultaneously could be giving the IRS cause to conduct a review. The IRS provides an easy method for filing online by utilizing e-file. Even if a person or company has to file an amended return, filing an annual return on time is a good way to avoid any possible serious problems.

Accurately Document

If a person or company is not certain the IRS will agree with their claimed expenses, deductions or exemptions, proper documentation could justify claims made on a tax return. Providing the IRS with acceptable documentation could validate a claim. It’s important to identify any items on a tax return the IRS could question prior to filing. An
IRS tax audit CPA will know what documentation is acceptable to the IRS.

Compliance

The simplest way to decrease the chances of an IRS audit is to not provide them with any reason to review a tax return. Being in compliance with all tax obligations is an easy way to avoid attention by the IRS.

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