How to Avoid Getting Audited

April 6, 2018

In 2016, just over 1 million taxpayers underwent an audit, which is just a 0.7 percent tax return audit rate. This rate is the lowest it has been in more than a decade, but that does not mean that you are completely in the clear. If you do not want to receive an audit notice, then there are a few actions you can take to reduce your risk, including working with Encino tax consultants.

Common Professions

Certain professions are just more likely to undergo an audit than others. Common industries for audits include:

• Cash professions such as bartenders, hairdressers and waiters
• Self-employed individuals
• Small businesses
• Service professionals such as doctors, lawyers and accountants

Other common tax returns to be flagged are those who make more than $1 million per year and those in the lowest income bracket due to their access to the Earned Income Tax Credit, which is a commonly misused credit.

Maintain Immaculate Records

The best way to protect yourself is to maintain immaculate records. Back up all income, expense, deductions, exemptions and credits you put on your tax return with receipts and other paper trails. Work with professional Los Angeles tax preparation services to ensure that your books are solid. You can include additional paperwork with your return explaining anything that might appear as odd so that you do not get red flags.

Proofread

Submit a clean, accurate return to greatly reduce your risk of an audit. Avoid having to submit an amendment because you realize you made a mistake by submitting it correctly the first time. Double check your math and ensure that all numbers match with any forms you received from your employers, investments and other institutions. E-filing can also help you to avoid mistakes and submit an easy-to-read return.

If you have taken the time to prepare a solid return that you can back up with your records, then even if you are chosen to undergo an audit, you should not have to worry about significant problems. Discuss your taxes with tax advisors or visit Wallace APC’s website for more information.