The word audit may be one of the scariest word for a business owner. It is a dreaded scenario by all, but if you avoid these red flags and keep in mind the suggestions below, you can further reduce your risk for an audit:
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Report ALL of your Income
The IRS will discover unreported income when they do the matching of your reported income versus other reports they received to uncover underreporting. Your primary job income may be hard to forget, but you might have done some consulting work or part-time job that could slip your mind. Make sure you include each and every income you have earned during the tax year on your income tax return.
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Be Careful When Claiming Deductions
There are many deductions to maximize your tax returns, but be sure that you know the appropriate tax rules to check if you qualify for the deduction. Tax rules change constantly and you have to be on top of your tax knowledge to apply the deductions properly. If you cannot do this, it is best to engage a tax professional like an Enrolled Agent.
You might be thinking you’re saving a lot by applying many kinds of deduction, but you could be triggering the IRS to audit you if you are doing this incorrectly.
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Check Your Numbers Again And Again
Avoid math and typographical errors no matter how small or simple they are. Mistakes like these should never have a room on your tax forms. It may seem like it’s just a little mistake, but the consequences of these are still huge.
Practice double or triple checking all your forms and the information within them before filing. Exerting a little more time to do this is far better than getting unnecessary audit and penalties because you failed to double check.
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Seek Help From An Enrolled Agent
Taxes are not meant to be done alone especially if you are the owner of the business or you are self-employed. Seek the help of an Enrolled Agent, the highest credential the IRS issued to tax professionals. They can help you take on this complex but critical aspect of staying tax compliant.
If you need help with your income tax preparation for this year, contact FAS today and let our Enrolled Agent help you. Contact us at admin@fas-accountingsolutions.com or at 832-437-0385.
