How To Avoid an IRS Tax Audit

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.

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.

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.

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.

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.

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!