How to make sure you'll get audited by the IRS

We all want to have a nice happy life without the men in suits knocking at our doors, I will show you a few things to avoid if you if you'd prefer not to be audited by the IRS.

Instructions

Difficulty: Easy

Things You’ll Need:

• common sense

1. Deductions. Although Uncle Sam allows for all kinds of deductions, his nephews and nieces at the IRS pay close attention whenever taxpayers claim them. Some kinds of deductions are more questionable than others, and the Home Office Deduction is one of the most frequently contested of all, largely because it's easy to fudge. In order to claim a Home Office Deduction, your home office must, in most cases, be your principal place of business, which means that you do most of your work there. More importantly, you have to use the space exclusively for running your business, and not for personal use as well. Otherwise the space simply doesn't count as a home office and may not be deducted as such. The rules can get pretty specific. Read IRS Publication 587 ("Business Use of Your Home: Schedule C Example) for the IRS' own explanation of what's permissible and what isn't.
2. Inconsistencies between your new return and last year's. For example, if you changed your name (from, say, John Doe to The Taxpayer Formerly Known as John Doe), or your spouse or your children changed their names, or if you're suddenly taking new types of deductions, the IRS is likely to notice and inquire about them.
3. Disagreements between your state and Federal tax returns. If you told the state treasury that you earned $50,000 last year, don't tell the Feds that you earned $52,000 or $49,000 or even $50,001. They'll wonder why you did, and then ask. The potential for discrepancies lies elsewhere as well. Remember that, as a contractor, you receive 1099s from all the people who paid you -- at least in theory. And when clients send you a 1099, they also send a copy to the IRS. If you report gross income that's less than the total amount indicated by all the 1099s submitted with your name on them, you run a high risk of being audited. (Yes, state and Federal tax authorities do share and compare data.)
4. Drastic changes in income. If you took in $50,000 last year, but report that you earned only $15,000 this year, the IRS will ask, "What the hell happened? Where's the money? Under your mattress? Up your butt?" Flashlight in hand, the IRS will look.
5. Round numbers, like "$3,000." These don't occur much in everyday life, and if your return is sprinkled with them, IRS agents will take notice.
6. Incomplete or sloppy returns. Don't leave any blanks where you should really leave numbers. Also, don't dash off your return with a blunt and chalky number-2 pencil; use a typewriter or a computerized tax-filing program like Intuit's TurboTax (for PCs) or MacInTax (for Macs). Otherwise you might end up translating your return -- in person.
7. Suspiciously low income. If your tax return indicates that you, your spouse, and four dependents live on Rodeo Drive in Beverly Hills on an income of only $18,312, agents will marvel at your ability to stretch a dollar -- and call you in for an explanation. In short, the IRS might question the accuracy of any return that shows both a low income and considerable financial obligations.
8. Most of the tax returns chosen for audit in a given year are chosen by a computer looking for returns likely to yield big bucks for the Federal Government, not by people trained to spot red flags, so maybe all this extra vigilance isn't worth it. On the other hand, do you really want to bet against the computers? Wouldn't you feel like an ass if you had to endure an income tax audit because you were too busy changing the oil in your Chevy to fill in the forms properly?

Tips & Warnings

• Filing early will guarantee and earlier return