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DEALING WITH THE IRS
Avoid an Audit
Just hearing the word “audit” is enough to make most taxpayers shudder. While having the IRS flag poke your tax return for may sound frightening, take heart -- you have about aone percent chance of being selected for IRS examination.
However, IRS audits are on the rise, targeting nearly 1.3 million returns in the 2006 fiscal year -- more than double the number of audits performed by Uncle Sam in 2000 . To lower your odds of being visited by the tax man and to save money on court costs and legal fees, follow these easy-to-implement suggestions:
MAKE SURE YOUR NUMBERS MATCH
The IRS gets copies of all the W2 and 1099 statements of earnings you receive from employers and financial institutions. If the income you report on your return doesn't match the figures on your statements you may be flagged for an audit.
Similarly, be sure the numbers on your state returns match those on your federal return. And if you pay or receive alimony, check with your ex to see that you’re both reporting the same figures. Any figures that don’t match up are a red flag for auditors
EXPLAIN ANY RED FLAGS
The IRS is on the alert for certain deductions, especially write-offs for home offices and substantial charitable donations. Although you should certainly claim any legal deductions you are entitled to, you must also be prepared to provide documentation proving your entitlement to those deductions.
REVIEW YOUR MATH
Simple mathematical errors can attract IRS attention. Double and triple check your math before submitting your return. Or better yet, let a computer software program do it for you. Turbo Tax from Intuit [http://turbotax.intuit.com/] and TaxCut from H&R Block [http://www.hrblock.com/] are two popular options.
DOCUMENT UNUSUAL CLAIMS
Did you have a substantial increase or decrease in income? Are you claming an abnormally large business loss? Deflect IRS scrutiny by including a detailed explanation and supporting documentation with your return.
DON'T LEAVE ANY BLANKS
Make sure all the necessary fields in your return are filled out. And don’t forget to sign your return -- a much more common mistake than you’d expect. Using a tax preparation software program and/or filing your taxes electronically can help you avoid these missteps.
THE BOTTOM LINE
While tax audits are not preventable, you can reduce the slight chance of being audited by eliminating errors in your tax return that may attract IRS attention.
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