Friday, April 24, 2009

Information on Avoiding an IRS Audit

Some issues that come up are simple mistakes such as when a divorced couple both claim the same defendants on their tax returns. Other more complicated issues may be a warning sign, such as a self-employed individual having higher outgoing expenses than incoming turnover. This would obviously be cause for investigation, as it would mean that a business is continually operating at a loss and would not be a viable concern.

If you make more than $100,000 per year then your chances of an IRS audit will increase. This is due to a past history of those in this income bracket manipulating the system to show their deductions as higher than they actually are in order to lower their taxes. Yet most people don’t want to limit their income to less than this if they don’t have to just to avoid an IRS audit.

Large amounts of itemized deductions on a tax return or large amounts of contributions to non profit organizations can really highlight your return. These are areas where the IRS is really getting tough because of fraudulent claims. Make sure you are very honest about these amounts on your tax returns.

More on this business article or Information on avoiding an IRS audit