When interacting with the federal or state taxation authorities, it’s never a good idea to file a tax return that has any information on it that may be incorrect or untrue. That being said, it is within your legal rights to pay the least amount of tax that the governing tax code determines is within the bounds of the regulations. This often generates a major issue for taxpayers when preparing their returns. How can they file a return that is representative of the lowest tax that they must legally pay, while at the same time not triggering an audit from the IRS?
This is no small matter because the tax code is immense, filled with rules that are complex and often difficult to comprehend. In addition, please remember that there are a variety of consequences for tax evasion, including bank levies, tax liens, and even court-ordered time in jail.
Will my tax return by audited?
Returns are likely to be audited for a number of reasons. Here are a few of the more common ones:
• Unusual or out-of-the-ordinary deductions or credits taken
• Numerous math errors on the return.
• Filing with improper schedules or forms.
• The income stated on the return is lower than that on your W-2 forms.
• Filing a complicated business return.
These are but a few of the areas that need attention to detail when filing your taxes. There are many more because of the complexities of the tax code.
How to prevent a tax audit
It’s important to be as accurate as possible and keep scrupulous records. These two areas alone are quite useful in minimizing the likelihood of an IRS or state audit.
Keep in mind that in general, the IRS can audit returns as old as six years. Therefore, keep copies of all federal tax returns and supporting documentation for at least as long as six years.
Of course, it is almost always in your best interest to partner with a competent CPA or tax professional when preparing and filing your taxes, unless, of course, your return is ultra-simple.
Get in touch with Abbo Tax for all your tax preparation needs.
