How to Avoid Getting Audited (And What to Do When You Are)

By Brandon Ballenger

NEW YORK (MoneyTalksNews) — What are the odds of being audited by the IRS? If you make less than $200,000 a year, it’s just over 1 in 100, according to its annual report.

Those odds are up slightly over the past six years, when the average audit rate was 0.98%. That’s because the IRS stepped up its game a few years ago to work on closing the tax gap, or “the amount of tax liability faced by taxpayers that is not paid on time.” That amount was $345 billion in 2001, rising to $450 billion in 2006, the last year the figure was calculated.

With today’s historic deficits, it’s not surprising Uncle Sam is looking harder for missing cash. There’s no guaranteed way to avoid an audit, because the government admits to picking thousands of people for audits randomly every year. But there are ways to avoid red flags — things that make your return suspect and more likely to be chosen for an audit.

In the video below, Money Talks News founder and CPA Stacy Johnson offers three tips to avoid getting a notice from the IRS. Check it out, then find more advice on the other side…

As Stacy suggested, always take the deductions you’re entitled to. An audit doesn’t mean you’re guilty of anything — it just means the IRS might need a closer look. Good documentation is your best defense, so stay organized and don’t throw anything out until you know you won’t need it. The IRS typically has up to three years to audit a return, although it goes back further in some cases. Here’s a recap of the tips you saw in the video, along with a few more …