The information in this article is up to date through tax year 2019 (taxes filed in 2020).
The IRS performs a certain number of audits a year, and there is no foolproof way to guarantee you will never be audited. However, there are some simple ways to be careful during tax preparation and stay off the radar. Here are the top four things you can do to avoid an audit.
Use exact numbers – not rounded ones
Nothing is quite as enticing to the Internal Revenue Service as shoddy math and round numbers. Generally, people are tempted to round out numbers to make calculations simpler. But when you file with TaxSlayer, the software does the math for you. As long as you enter your dollar amounts correctly, your return is guaranteed to be 100% accurate.
If the numbers you are reporting on your tax return don’t match what is on your W–2 tax or 1099 form, then that sets off a red flag. Be careful when copying over amounts during tax preparation.
Keep good expense records
If you have a small business (or you are self-employed) and you report a loss on your Schedule C, this may attract the attention of the IRS. There are plenty of legitimate losses in the business world. Just remember to keep records to justify your claimed expenses. It is easy to abuse business deductions in general, and the IRS knows it. If you are going to write off the cost of a purchase, a meal, mileage, etc. and not be flagged for it, then your expense must be ordinary and necessary to your business.
Follow the rules for deducting a home office
Many people – especially those with a side gig or small business – will take a deduction for expenses related to their home office. Taking this deduction makes you slightly more likely to be audited because many people will claim it unfairly. To ensure you are eligible, make sure that your home office and equipment are not used for anything other than legitimate business needs. Read the full rules for claiming the home office here.