How to Avoid an IRS Audit

Video Transcript

"Are you ever doing your taxes and you wonder, how am I going to avoid an IRS audit? My names Danielle and I'm with Excel, a certified public accounting firm, and I'm here to help you avoid an IRS audit. I know there's a lot of things that can go wrong, and some people ask, is there a fool proof way? Unfortunately, there is no fool proof solution. However, there's a mathematical calculation that the IRS performs and there's certain high risk areas that can make you more susceptible. One of the areas is itemized deductions. For instance, if you make forty thousand dollars a year and you have twenty thousand dollars of itemized deductions, someone at the IRS might scratch their head and say, hey wait a minute, that seems like an awful lot. So, avoid overusing your opportunities for itemized deductions. Again, something you should think about is, do I have proof for this deduction? If you do great, put it on your schedule, even if you're selected for a review, that doesn't mean you'll automatically get audited, all it means is that you'll have to show your support. Another area is unreported taxable income. So people who think, oh, well just because I made this W2 form and it's been turned into the IRS, or, I'm a 1099 contractor, I don't have to report all my wages. What you have to understand is that your employer who paid you those has to report that information into the IRS. So if you under report, there's a good chance someone might come knocking on your door asking you why. The last area that I'd like to talk about today is for those of you that are self employed. You often have to fill out schedule C on your tax form, and this is an area that the IRS likes to look into. Mainly because it's not as supervised as the other areas, and people who have home office deductions or shoddy mileage logs, might come under some review. So, all in all what you need to remember is that if you don't have proof for it, don't take the deduction. My name is Danielle and I hope that I have helped you avoid and IRS audit."