[dropcap style=”font-size: 60px; color: #f25d5f;”]O[/dropcap]ut of the individual tax returns that were filed in 2014, approximately .85% of them were later audited. Finding that you may be audited by the IRS can be very frightening.
Therefore, it is always important to fully understand tax law to avoid this situation. There are a few things that you should keep in mind in order to determine if you may be at risk for an audit after you have filed your taxes.
One of the major risk factors would be filing returns with incorrect information ranging from inaccurate spellings to inversed social security numbers. Every mistake on a tax return is a serious mistake. Take the time to review all of your information before you submit your tax return. Doing so can help you avoid any complications later on. Always check your name, the spelling, as well as your social security number. You may be at a greater risk of being audited if your background information is incorrect.
Those individuals that have a business may be at risk for an audit if they have reported any losses during that year. Many individuals are unaware of the fact that the IRS will be a lot more interested in their business, and their revenue books, if they have reported a loss. This is because the government will want to make sure that each and every loss they have reported is legitimate.
While losses can be a trigger for the government to look at you closer, what you must understand is that this is not a given criteria for an audit. That means that you should take the time to look over the losses that you have reported and determine if they are reasonable and they are within the guidelines of tax law. If you have reported losses for transportation, food or even travel, and they are extremely high the government will become extremely concerned and they may begin looking at your business.
If you have a job that is mainly cash based, meaning you are paid with cash or you are earning tips, you have a great chance of being audited. That is why you need to fully understand tax law. This will help you report information to the government accurately and decrease the chances of being audited down the road.
What you have to understand is that being honest is always the best policy. Even if an individual lies on their taxes and does not get audited, this does not mean that they will have the same outcome the next time. Tax fraud is a crime and you will eventually be caught. Take the time to learn about the laws and file your taxes appropriately. If you are really struggling with the law then you should consider hiring a professional to help you. Doing so will greatly decrease the chances of being audited and it can certainly decrease any stress you may suffer from during tax season. Contact a tax audit attorney to learn more about how to cope with a pending audit.