Just hearing the word audit is enough to send most people running for IRS Tax Audit Help and send a shiver up their spine. Wouldn’t it be great if to learn how to avoid a IRS tax audit? Well there are certain things you can look out for that will trigger an audit. Here are a few:

Claim Tax Deductions You Are Entitled To:

Take the legitimate credits and deductions that you are entitled to. If there are questionable items on your tax return that could raise a red flag you might want to send with the return an explanation and/or documentation to back up the claims legitimacy. If it is reviewed by a real person because the return has been flagged these will help, and prevent the need for IRS tax audit help.

The Discriminate Index Function:

The IRS uses a computer program to flag tax returns. This program is named the “Discriminate Index Function” (DIF). DIF compares a taxpayer’s deductions with others in the same income bracket. The program gives every return a computer generated score that indicates the probability that questionable items exist on the return. The more your return deviates from what is considered NORMAL, the higher your score will be and of course the more likely you will be audited.

Some Common IRS Tax Audit triggers are:

1) PLEASE for your sake, report all your income, this can help avoid an IRS tax audit. The IRS has computers that will compare income you reported when you filed your return to information it receives from employers and from 1099 forms that were issued by banks and brokerage firms to you. Compare the income you plan to report on your 1040 to your W2 forms and all 1099 forms, before you file.

2) Itemized deductions you have claimed that are unusually high based on your income can trigger an audit. For example, lets say you make $29,000 and you show charitable contributions of $10,000. This would not be reasonable for the income you have reported and, it is very likely the IRS will look closer at your return.

3) You wouldn’t think that being in business would be a trigger but it is one, especially if you are a sole proprietor and file Schedule C. This is partially true because the IRS has surmised that those that are self employed have more opportunity to hide income. It also allows the taxpayer opportunity to convert personal expenses into business expenses. The home office deduction is tricky so you might want to consult with a CPA or other tax professional to determine your eligibility before claiming the deduction.

4) Many taxpayers receive all or a large portion of their income in cash. Waiters, taxi drivers, hairdressers etc… are prime targets for an IRS audit. That’s in part because they receive much of their income in the form of cash tips. The best advice you will ever be given is to keep accurate records. A IRS publication 1244, Employee’s Daily Record of Tips and Report to Employer should be used to track daily tips.

5) In case you’re divorced, only one parent, usually the custodial parent can claim a child as a dependent. A tax waiver is required if that is not the case, signed by the custodial parent in order to take the deduction. Be aware the IRS matches tax deductions for alimony payments by one former spouse with the taxable income reported by the other.

6) Offshore accounts are rarely used by people whose wages are reported to the IRS by employers. The money generated in offshore accounts is legal so long as it is reported and taxes are paid. The failure to declare this income and to pay the tax on the income is a felony punishable by up to five years in prison.

7) If your return is signed by a tax preparer that is on the IRS’s list of “problem preparers”(preparers that have violated the law repeatedly), this increases the probability of audit selection. Too bad this list is not available to taxpayers. Wisely choose your tax preparer.

Any scheme, scam, questionable filing and even honest mistakes can raise a red flag and lead to an audit. Professional tax preparation help show you how to avoid an audit. However, should you be audited don’t hesitate to seek professional IRS tax audit help.

Tax preparation can be confusing and stressful get more information on IRS Tax Audit Help as well as other resources related to tax preparation and tax resolution at Tax Preparation Help here:

The process of selecting a return for an audit usually occurs in one of two ways.

First IRS uses computer programs to identify returns that may not include all W-2 or 1099 Income, as compared to waht was reported by Employers or Companies that hire Independent Contractors.

IRS is not above, and admits, to obtaining information about taxpayers income from sources such as newspapers (news), public records, previous returns, averages, and OTHER individuals! If IRS decides that the information is accurate, they may audit your return.

Audits, or “Examinations” as IRS calls them, can be handled by mail or in person.

If your return is examined by mail, IRS will send you a letter asking for more information. You can respond by mail or you can request an interview with an examiner.

If IRS wants to “see” you they will conduct your examination via a personal interview.

If you do not agree with what the examiner tells you in your meeting, you can meet with the examiner’s supervisor.

If you don’t agree with the examiner or the supervisor you can appeal to the Appeals Office of IRS.

A taxpayters Appeal Rights are explained in Publication 5 and Publication 556, Examination of Returns, Appeals Rights, and Claims for Refund.

If you do not wish to use the Appeals Office or disagree with the outcome you can take your case to the U.S. Tax Court, U.S. Court of Federal Claims, or the U.S. District Court where you live.

It is our suggestion, depending on the nature of the audit, that if IRS says “Examination”, you say “Enrolled Agent”

Cassandra Ingraham is a Tax Accountant and Instructor for Basic Tax Classes in the San Francisco Bay Area. During the balance of the year she can be found at http://www.taxeswilltravel.com providing Formal Introductions to Lenders for Accounts Receivable Funding (Factoring) and Purchase Order Funding.

Individuals with Tax issues can find dozens of self-help tax articles at: here

Do you remember when everyone read the classified ads? You could buy or sell anything (legal) by placing an ad in the newspaper or the item-specific ad weeklies; of course you still can, but an even better option for most consumers and marketers these days is the online seek/find route.

Someone out there is looking for a new home but dreads the process of driving to, walking through, and weighing options while a sales agent breathes down the back of their shirt. The buyer prefers to be their own “finder” but may retain a realtor as the transaction agent, the one who handles the paperwork after finding a new home. Wouldn’t we all like to omit the middleman (or woman) as often as possible, or rather omit their fee? A prospective buyer goes online and looks for a home for sale by owner. That buyer may be in your hometown or on the opposite side of Earth.

Used- car salesman. That’s a term that evokes unpleasant images of a coarse loudmouth in a gaudy plaid sports coat, hawking lemons of various vintage. Our apologies to those professional auto salespersons out there; we know that many of you suffer daily because of that stereotype. A lot of us, male and female, enjoy a review of the auto classifieds; I personally always home in on the ones that indicate a car for sale by owner. Hoards of would-be car buyers search the online ads daily and nightly.

In the piney woods of a northern state where summer is a delight and winter is an endurance test, someone is looking for a change. Butterflies make them smile and snowdrifts send them into depression. Just for such a person is an ad that states “Time Share for Sale by Owner.” Equally anxious to escape the heat of the Deep South is someone who would love to partner with them on a home away from home, a man or woman who yearns to hop onto a snowmobile or strap on skis and cool off. Talk about making everyone happy…

His riding lawnmower blew its engine; the last time he tried to clean out the rain gutters on the eaves, he fell off the ladder, and when he was up there he also noted several loose singles. The fifteen-year guarantee on the roof is about to expire. Arthritis is gaining on him, making home and yard maintenance a real pain–literally. But I want a nice home of my own, he thinks. I don’t want to waste money pouring it down a rented rat hole. He is in the market for a condo; catch his interest and perhaps make a sale by listing your condo for sale by owner. His son works for a large sporting goods store in an affluent section of the city. Just as Dad is ready to move into a new home, his son is ready to move on and rid himself of the unreasonable dictator who is his boss, whose managerial style is causing so much stress that the son’s health is negatively affected. He is ready to become the boss and run his own business. He goes online to search for a business for sale by owner.

The Internet was the prime tool for all of the buyers and sellers in the above scenarios. It can be yours, too.
About the Author

Simon is the “nom de net” for a professional writer on many topics. His work includes book authorship, TV producer and independent writer for many national magazines.here