Ellsworth & Associates CPAs - Accountants in Cincinnati
  • About
  • Services
    • Tax Strategy Network
    • Financial Planning
    • Accounting
    • Outsourced Accounting
    • Business Consulting
  • Individuals
    • Individuals
    • Real Estate Investors
    • Clergy
    • Business Owners
    • Professionals
  • Businesses
    • Small Businesses
    • Mid-Size Businesses
    • Real Estate Investors
  • Organizations
    • Churches
    • Non-Profits
  • Resources
    • Pay Your Bill
    • Tax Resources
    • E-File
    • Real Estate Resources
  • Contact
    • Contact Us
    • FAQ
    • Review Us
  • Login

How to Lower Your Chances of Being Audited

3/28/2017

0 Comments

 
How to Lower Your Chances of Being Audited
Nearly every taxpayer can imagine a worst-case scenario where they run afoul of the IRS and are selected for an audit. Here are a few areas that tend to get unwanted audit attention and ideas to help you stay prepared.

Your audit risk is (probably) low. The first thing to remember is that the risk of having your tax return examined by the IRS is probably very low. The IRS audits less than 1 in 100 returns. If you are among the roughly 95 percent of Americans who make less than $200,000 a year, your chance of being audited is closer to 1 in 200. Audit chances rise dramatically the higher your income is above $200,000, according to the IRS annual Data Book.

Areas That Get Attention:
  • Missing something. Aside from your income level, one of the biggest red flags for the IRS is a missing or incorrect tax form. Assume a copy of every official tax form you get also goes to the IRS.
    • Lower your risk: Create a list of all your expected tax forms. Check them off as you start to receive them over the next month or so. Immediately review the forms for accuracy. These include W-2s, 1099s, 1095s, 1098Ts and more.
  • Excessive deductions. Your risk of an audit increases when your tax return shows unusually high-value itemized deductions, such as charitable donations or losses from theft.
    • Lower your risk: A legitimate deduction should always be taken. If your itemized deductions are high, make sure your proof of these deductions is well documented.
  • Large charitable donations. Your chances of an audit increase if you take large deductions for donations to charity, especially "noncash" donations of property with unclear value.
    • Lower your risk: Always remember to file a Form 8283 for any donation above $500 in value. If you are donating anything at that value or higher, it may be worth paying for an appraisal of the value of the property so you can defend your deduction.
  • Disparities with your ex. Your tax return may as well have a red siren attached to it if you and an ex-spouse are not on the same page on claiming dependents, child support, or alimony.
    • Lower your risk: Ensure you and your ex-spouse are consistent in how tax items are treated on your separate returns. If you have had problems with this in the past, a quick phone call could save headaches for both of you.
  • Business activity. IRS agents have a keen eye for small business reporting, typically done on a Schedule C. In particular, the agency is quick to review claimed business activities they perceive as being hobbies.
    • Lower your risk: Maintain detailed business accounts and record significant time spent on your business activity in order to demonstrate both professionalism and a profit motivation.
0 Comments



Leave a Reply.

    Archives

    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016

    Categories

    All
    Business
    Capital Gains
    Deductions
    Donations
    Healthcare
    Investing
    IRS
    Life Changes
    Non Profit
    Personal Finance
    Real Estate
    Retirement
    Security
    Self Employed
    Social Security
    Taxes

    RSS Feed

Ellsworth & Associates, Inc. CPAs
513.272.8400
Cincinnati: 9624 Cincinnati Columbus Road, Suite 209, Cincinnati, OH 45241

Terms of Use
Privacy Policy
FAQ
© 2017 Ellsworth & Associates, Inc.
  • About
  • Services
    • Tax Strategy Network
    • Financial Planning
    • Accounting
    • Outsourced Accounting
    • Business Consulting
  • Individuals
    • Individuals
    • Real Estate Investors
    • Clergy
    • Business Owners
    • Professionals
  • Businesses
    • Small Businesses
    • Mid-Size Businesses
    • Real Estate Investors
  • Organizations
    • Churches
    • Non-Profits
  • Resources
    • Pay Your Bill
    • Tax Resources
    • E-File
    • Real Estate Resources
  • Contact
    • Contact Us
    • FAQ
    • Review Us
  • Login