Tax Tips To Avoid An Audit - Fox 2 News Headlines

Tax Tips To Avoid An Audit

Posted: Updated:

How To Avoid An Audit

-Check your figures. Math mistakes are easily found and raise eyebrows

-Don't under report income. Remember your W2 and other incomes are also reported to the IRS separately and compared

-Keep it simple. If you file Form 1040-EZ, pay rent, don't have children and make a modest income, there is virtually no chance you will be audited unless something's really out of whack.

-File electronically. The error rate for a paper return, the IRS reported, is 21 percent. The rate for returns filed electronically is 0.5 percent.

-Taking Large Charitable Deductions.  The IRS knows what's normal for your income level.

-Claiming Rental Losses. There are specific rules for investors, passive losses and those in the business. Be careful

-Deducting Business Meals, Travel and Entertainment. Watch out it is the number one place for fraud.

-Claiming 100% Business Use of a Vehicle. An eye opener, particularly if it's your only car. Some people inappropriately take extra expenses on top of the 'standard mileage deduction.'

-Writing off a Loss for a Hobby Activity. You must report any income you earn from a hobby, and you can deduct expenses up to the level of that income. But the law bans writing off losses from a hobby.

-Claiming the Home Office Deduction. Beginning with 2013 returns, you have a simplified option for claiming this deduction. The write-off can be based on a standard rate of $5 per square foot of space used for business, with a maximum deduction of $1,500. The IRS is watching this.

-Running a Small Business. Small business owners in cash-intensive businesses (taxis, car washes, bars, hair salons, restaurants and the like) are a tempting target for IRS auditors.

-Failing to Report a Foreign Bank Account. The IRS is intensely interested in people with money stashed outside the U.S., especially those in tax havens.

-Engaging in Currency Transactions . If you make large cash purchases or deposits, be prepared for IRS scrutiny.


If you do get selected for an audit, don't forget about Form 911. It's used to request help from the Taxpayer Advocate Service. The number might seem like a joke, but the service is an independent department of the IRS that helps people who can't afford professional representation.

 

  • Local NewsMore>>

  • Suspect Arrested In Upper Merion Burglary, Home Invasion

    Suspect Arrested In Upper Merion Burglary, Home Invasion

    Wednesday, July 23 2014 1:05 AM EDT2014-07-23 05:05:55 GMT
    SkyFOX was over the scene in Upper Merion just after 8 a.m. on Tuesday morning where police say what started as a burglary turned into a home invasion.
    SkyFOX was over the scene in Upper Merion just after 8 a.m. on Tuesday morning where police say what started as a burglary turned into a home invasion.
  • 'Tuesday's Children' Remembers Family Members Lost To Terrorism

    'Tuesday's Children' Remembers Family Members Lost To Terrorism

    Wednesday, July 23 2014 12:35 AM EDT2014-07-23 04:35:22 GMT
    These children all share a common bond. They've all lost someone they love - because of terrorism.
    These children all share a common bond. They've all lost someone they love - because of terrorism.
  • Shoppers Get Sneak Peak Of New Target Store In King Of Prussia

    Shoppers Get Sneak Peak Of New Target Store In King Of Prussia

    Tuesday, July 22 2014 10:58 PM EDT2014-07-23 02:58:18 GMT
    Shoppers got a sneak peak of the mega Target store located by the King of Prussia mall on Tuesday.
    Shoppers got a sneak peak of the mega Target store located by the King of Prussia mall on Tuesday.
Powered by WorldNow

WJBK-TV | Fox 2
16550 West Nine Mile Rd.
Southfield, MI 48075

Main Station: (248) 557-2000
Newsroom: (248) 552-5103

Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | Terms of Service | Ad Choices