When the Internal Revenue Service employees review tax returns from Dallas and around the nation, there are some sure signs they look for that will trigger an audit. To make sure the IRSdoesn’t clamp down on your return, experts recommend following these steps to try to audit-proof your return.
· Watch the tax preparer carefully. If the preparer says you will receive a high refund but doesn’t ask for paperwork to back up deductions, think twice about signing that return. Always look over the return before it is filed because you are the making the legal representation, not the tax preparer.
· Double check the return for mistakes. Even accidental math mistakes will put the return under greater scrutiny. Also check for correct Social Security numbers.
· Don’t expect to get away with anything illegal. The IRS offers people who report tax cheats a reward of as much as 30 percent of tax or penalties it collects following an audit.
· Don’t overestimate about donations. When giving items to a thrift shop, use the resale value to figure their worth, not the original or replacement value. Date receipts and keep them. The IRS will question donations that are high in relationship to your income.
· File your return. The IRS will find you if you don’t; it has ways of identifying people who filed in the past and no longer do.
· If you own a business, don’t neglect to list any income. The IRS looks closely at small, businesses. If it comes to an audit, the IRS will look twice as hard as hobbies passed off as businesses, especially if a loss is deducted.
· Be careful what you claim for a home office. Use only the parts of your house that are solely used for business, and it must be your primary place of business.
· If you are reporting investment profits and losses, don’t guess. Brokers now report such information to the IRS and will match dates you report for buying and selling of investments.
· If you have been audited before, the likelihood of another audit increases. Be careful to verify returns for the next few years.
Source: CNN Money, “11 tax audit red flags,” Blake Ellis, March 28, 2012