Kelly Bullis
I don’t know of anybody who likes getting any letters from the IRS, especially one that is either a focused audit inquiry or the beginning of a real audit.
How do you reduce the risk of getting any of those kinds of notices? How do you avoid getting any notices from the IRS?
The first thing has to do with common mistakes the IRS is watching out for. Make sure you match or exceed any amounts reported on a form 1099. Also, make sure all Social Security numbers are correct.
Be honest. Ask yourself, “If I were standing before an IRS auditor, can I back all the income and expenses claimed with receipts?”
Be realistic. The IRS has a database of reasonable deductions. If your deductions are much larger, you stick out like a sore thumb. Or another way of putting it, your return waives a red flag asking the IRS to look closer. Somebody once say, “Pigs get fat, hogs get slaughtered, so don’t be a hog.”
E-file. About 95% of all returns filed are e-filed. The e-filing process reduces errors with Social Security numbers, math errors, poor handwriting, etc. Also, you are making sure the IRS has the correct numbers, not relying upon a person to manually type in your information if you mail in your return.
Use a reputable tax professional. The IRS pays attention to who prepares your return. They are not as interested in auditing a return prepared by somebody who has a good reputation of following tax law, and documenting their work. On the other hand, self-prepared returns have a much higher chance of having errors. Also, unscrupulous tax preparers who have a reputation of fudging numbers are watched closely by the IRS. A good tax preparer knows how to properly prepare a return in such a manner as to reduce “red flags” that can trigger the IRS. Wording used, forms used, etc., can make a difference.
If you still get audited by the IRS, your best action is to hire an experienced tax professional who knows how to navigate the audit process. Never volunteer extra information. Stay calm, don’t panic, and you’ll get through it.
Have you heard? Proverbs 29:25 says, “The fear of man lays a snare, but whoever trusts in Yahweh is safe.”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 775-882-4459. On the web at BullisAndCo.com. Also on Facebook.