Ten Easy Ways to Avoid Being Audited by the IRS

A small percentage of taxpayers are audited. Some are chosen at random. There is nothing you can do about this except to be prepared. Save receipts and paperwork and a copy of your 1040 and any forms and schedules that were attached to it. Other taxpayers are chosen because the IRS believes they have lied on their returns. Actually, the computers at the IRS believe the taxpayer has lied. These tips will help filers from arousing the suspicions of the computers.

1. Be honest. When you are preparing your return, understand that all of the tax-relevant information sent to you has already been sent to the IRS. They know all the numbers on your W-2's, 1099's mortgage interest statements, bank interestbtab statements. If you have received information from an organization, the computer knows what it is. Do not forget, invent, or pad any of these numbers.

2. Be careful. Make sure all names are spelled properly and all social security numbers are correct. If your dependant's \tab name is spelled differently this year than last year, the IRS will wonder if this is your dependant or, in fact, if the \tab person exists. Double check this information before submitting your return

3. Be consistent. When filing taxes, you are allowed to round the amounts to the nearest dollar. Make sure all numbers are either exact or rounded.numbers. You cannot use two different sets of figures.

4. Use the easiest form available for your situation. People filing a 1040EZ will not be audited. However, very few adults are eligible to use this form. Unnecessary schedule and forms can set off the alerts at the IRS. Keep it simple.

5. Use the standard deduction. Very few people who do not have mortgages on their primary homes or extraordinary medical expenses have enough expenses to itemize their deductions. If the amount you are claiming is not much more than the standard deduction, do not itemize. This may not maximize your return but it will avoid an audit.

6. Include all forms. If you do itemize your deductions, be sure to inlcude all of the necessary forms. Every credit and most deductions an additional form associated with them. If you are claiming employee business expenses, writing a number on 1040 line 20 is not enough. Form 2106 must be included. Every credit and most deductions require separate forms. Make sure all of yours are in the packet.

7. Avoid red flag percentages. The computers at the Internal Revenue Service have percentage programmed into them. For most employees, these are triggered by gifts to charities and employee business expenses. Gifts to Charity has two separate alerts. Donations of those who earn more than $100,000 a year will trigger at 50% of the annual gross income. Those who earn under $100,000 a year should keep the gifts to charity deduction at below15% of the AGI.

Employee business expenses will set off an alarm if they are 50% or more of the AGI.

8. Compare this year's return to last year's. Assuming the taxpayer has the same job and the same living situations, the deductions should be similar. Any large increase or decrease could cause an audit.

9. Avoid using the married filing separately filing status. There is little benefit to this filing status. Generally, it is used so one spouse does not become responsible for the other's back child support or back taxes. If neither spouse is behind in child support or taxes, it could cause suspicion at the IRS.

10. Hire a professional or use pre-packaged software. Tax programs have the IRS' red flags built into them. They will alert you if your return may be audited.

You cannot avoid a random audit but these tips could stop the Internal Revenue Service from highlighting your return!