Category: Accounting

Accounting

Tips To Avoid Triggering An Audit

The one thing all tax payers try to avoid is getting an audit by the Internal Revenue Service (IRS). Just hearing the word causes stress in a lot of tax payers. There are situations and instances that will cause the IRS to take a closer look at your taxes and have you audited.Sometimes it may just be a bad luck of the draw since tax payers can be picked at random. The best way to try to avoid an audit is to avoid known triggers which we discuss below.

Are you reporting a huge loss? There are some people that have a vision to create a business that has so much potential in the beginning stages but then everything takes a dive and the business fails; this would be a huge loss. This happens to many people and if you are one of those people then you need to make sure that you have all of the proper documentation of your loss before you try to file it on your tax return. The IRS has been known to research all the losses that you are claiming and especially if they are large amounts. You want to make sure that your losses are not just on paper.

There are lots of people that have accounts in other countries and there is nothing wrong with that unless you are thinking that because it is in another country that you dont have to file taxes on it. Any account that has a minimum of $50,000 U.S dollars in it has to be reported every year to the IRS and it doesnt matter if you are out of the country at the time you file.

People with a higher income are more likely to be audited. Most people that have higher incomes do file taxes on their income and they have all the proper deductions and they still get audited; I know it sounds farfetched but it is absolutely true. When this person is audited, it doesnt mean that anything was done incorrectly or maliciously, it simply means that your income was just large.

There are other things that can trigger an audit but these are just a few of the reasons that happen most often. Speak with a professional tax accountant who can help advise you on best practices and even offer their tax services for your particular situation.

One of the most important things you need to remember when filing taxes is to always keep your documentation. When you are filing taxes, this means keep the proof of your deductions, receipts and etc., and be honest. If you follow those things then even if you are audited, you will come out on top.

Accounting