How to NOT be audited by the IRS

May 22, 2017

Just to be clear I am by no means a IRS expert.  The only thing I have really learned about owning a business with the IRS is to save every letter you get (in order; I prefer to keep in the cloud) & that it is difficult to fight with them once you are on their radar.  

 

Don't want to talk to the IRS?  Me neither, so when our awesome CPA group forwarded me some info on how to NOT be audited I thought it would be beneficial for everyone.  

 

We work with The Mangold Group here in Austin, TX.  Super professional group with extensive knowledge. 

According to them, here are some helpful tips to NOT get audited by the IRS:   

 

-Audits are becoming less common.

The number of individual tax returns the IRS audited fell to a 12-year low last year, to just above 1 million.

 

-Audits target the rich. 

It's a fact: IRS audits happen most often to the super-rich. The statistical chance of being audited increases dramatically for people of higher income leve

 

-Missing data gets you audited. 

Any missing data on your return can also trigger an audit, since the IRS usually receives a copy of the same tax forms you get every year.

 

-Standing out gets you audited.

The IRS takes a close look at business expenses, charitable donations, and high-value itemized deductions. They have statistical data on what amounts are typical for various professions and income levels. If your return stands out from what is "normal," it may be flagged for review by the agency's computer system.

 

-More audits are done by mail.

If you face an audit, it's most likely that it will be done by mail. Only about one in four IRS audits are field audits conducted in person by an IRS agent. The most common issues, such as math errors or missing data, are done through mail correspondence.

 

-Most audits end up costing you.

You can fight the tax law, but the tax law usually wins. Most people audited by the IRS end up owing additional tax. Only 11 percent of correspondence audits and 8 percent of field audits concluded with a "no change" finding in favor of the taxpayer.

 

I don't know about you, but I try to do everything in my ability to stay in good graces with the IRS. Life is much easier that way ;)  

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