One of the most frightening thoughts many taxpayers have is the idea of being audited by the IRS. Due to budget cuts, the number of annual audits appears to be declining among taxpayers who earn less than $200,000. However, higher-earning taxpayers, especially those with incomes of $1 million or more, have seen a recent increase in the likelihood of being audited. Fortunately, there are steps taxpayers can take toward preventing an IRS audit.
Keep Accurate Records
Before filing a tax return, one of a taxpayer’s most important tasks is to ensure all records are in order. Those who make donations to charitable organizations must follow the strict rules that specify acceptable forms of documentation for the contribution. Donations of $250 or more require a letter from the charitable organization. Contemporaneous records are also important as they may provide proof of important business matters that have been discussed or miles a taxpayer may have driven in supporting a charitable cause. Taxpayers should also keep third party records such as 1099 forms that document miscellaneous income, such as dividends or retirement plan payouts. In the event that third party records contain mistakes, the errors should be corrected as soon as possible. If the mistakes cannot be corrected in a timely manner, the taxpayer should provide the incorrect information on the form along with the corrected details. Providing both the correct and incorrect information may be the key to preventing an IRS audit that might otherwise be triggered if only the correct information is given.
Avoid Ignoring IRS Notifications
Some taxpayers immediately panic upon receiving a notification from the IRS. Panicked taxpayers may feel intimidated and naturally wish to ignore communication from the IRS. While wanting to ignore an IRS notification is not uncommon, taxpayers should always respond. When responding to the IRS, using an easily traceable delivery method such as certified mail is highly recommended.
Seek Representation
If efforts toward preventing an IRS audit fail, taxpayers are advised to seek out professional help. Having qualified IRS audit representation may save time and frustration. As a seasoned CPA, Gary M. Kaplan is available to offer professional guidance and representation to taxpayers in Florida, New York, Washington, D.C., Utah, and Maryland. Clients can always expect to receive personalized, knowledgeable, friendly service when interacting with the highly skilled team at Mr. Kaplan’s firm.
